If the Annual Real Rate of Interest Is 4%, and the Expected

question 34

Multiple Choice

If the annual real rate of interest is 4%, and the expected inflation rate is 3%, the nominal rate of interest would be approximately

• A) 4%.
• B) 3%.
• C) 1%.
• D) 5%.
• E) None of the options are correct.

---

Definitions:

Wares

Products or goods that are available for sale.

Consumer Reports

A nonprofit organization that provides reviews and comparisons of consumer products and services based on testing and research.

Specialty Product

A product that is characterized by a unique quality, brand, or characteristic that consumers are willing to make a special purchase effort to obtain.

Shopping Product

A type of product that consumers purchase after comparing quality, price, and style from various sellers, requiring more thought and effort than routine purchases.