If the Inflation Rate Is 3% and the Nominal Interest

question 6

Multiple Choice

If the inflation rate is 3% and the nominal interest rate is 4%, then the real interest rate is around

• A)1%.
• B)3%.
• C)7%.
• D)12%.

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Definitions:

Asset Account

An account on a balance sheet representing tangible or intangible items of value owned by a company.

Trial Balance

A ledger balance sheet summarizing all accounts, showing equal totals for both credit and debit columns.

Trial Balance

A bookkeeping worksheet in which the balances of all ledgers are compiled into debit and credit account column totals that are equal.