If the Desired Real Rate of Interest Is 5 Percent

question 169

Multiple Choice

If the desired real rate of interest is 5 percent and the expected rate of inflation is 15 percent, what is the nominal rate of interest?

• A) 5 percent
• B) 10 percent
• C) 15 percent
• D) 20 percent

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Definitions:

Sales Price

The amount of money a buyer pays to purchase a product or service from a seller.