When Newspaper or Magazine Articles Claim the Effectiveness of Some

question 54

Multiple Choice

When newspaper or magazine articles claim the effectiveness of some product or service, it is wise to

• A)realize that the authenticity of the report has been thoroughly checked by the media.
• B)be wary of overly complex explanations.
• C)remember that truth is often stranger than fiction.
• D)consider the source of the information.

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Definitions:

Nominal Interest Rate

The interest rate before adjustments for inflation; the stated or face interest rate on a loan or investment.

Real Rate of Interest

Real Rate of Interest is the interest rate that has been adjusted to remove the effects of inflation, providing a more accurate measure of the cost of borrowing.

Rate of Inflation

This refers to the annual percentage increase in the general price level of goods and services in an economy over a period of time.

Effective Usury Laws

Laws designed to set maximum interest rates that can be charged on loans, to prevent lenders from charging excessively high rates.