If You Expect the Inflation Rate to Be 15 Percent

question 42

Multiple Choice

If you expect the inflation rate to be 15 percent next year and a one-year bond has a yield to maturity of 7 percent,then the real interest rate on this bond is

• A)7 percent.
• B)22 percent.
• C)-15 percent.
• D)-8 percent.

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Definitions:

Clayton Act

A U.S. antitrust law enacted in 1914, aimed at promoting competition and preventing monopolies.

Federal Courts

Courts established by the federal government of the United States, having jurisdiction over matters explicitly outlined in the constitution and federal statutes.

Labor Strikes

Work stoppages initiated by employees to protest against their working conditions, pay, or other employment issues.

Norris-LaGuardia Act

U.S. legislation passed in 1932 that restricts the power of courts to issue injunctions against nonviolent labor disputes.