How Is It Possible for Real Rates of Return to Increase

question 56

Multiple Choice

How is it possible for real rates of return to increase during times when the rate of inflation increases?

• A) Inflation increased more than the real return.
• B) Nominal returns actually decreased.
• C) Nominal returns increased more than inflation.
• D) Nominal returns increased less than inflation.

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Definitions:

Determinants Of Elasticity

Factors that influence the sensitivity of the quantity demanded or supplied of a good to price changes.

Availability Of Substitutes

The extent to which similar or alternative products and services are accessible to consumers, influencing their choices and market demand.

Linear Demand

An economic model where demand for a good or service changes proportionately with changes in price.

Unit Elastic

A situation in demand or supply where the elasticity is exactly one, indicating that a change in price results in a proportionate change in the quantity demanded or supplied.