Over the Past Year You Earned a Nominal Rate of Interest

question 51

Multiple Choice

Over the past year you earned a nominal rate of interest of 10 percent on your money.The inflation rate was 5 percent over the same period.The exact actual growth rate of your purchasing power was

• A)15.5%.
• B)10.0%.
• C)5.0%.
• D)4.8%.
• E)15.0%.

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Definitions:

Cognitive Miser

A term used to describe people’s reluctance to do much extra thinking.

Carefully Thinks

A cognitive process involving deliberate and thorough consideration of various aspects of a situation or problem.

Rational Decision

This term describes a decision-making process that is based on making choices that result in the optimal level of benefit or utility for an individual.

Schema

A cognitive framework or concept that helps individuals organize and interpret information, based on past experiences and knowledge.