The Nominal Interest Rate Is 7% and the Expected Inflation

question 160

Multiple Choice

The nominal interest rate is 7% and the expected inflation rate is 2%.Based on the Fisher effect,the real rate of interest is

• A) 5.0%.
• B) 6.86%.
• C) 5.1%.
• D) 4.9%.

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Definitions:

Quantum Meruit

A legal principle that allows a person to recover the reasonable value of services provided, when no specific contract was made as to payment.

Equitable Estoppel

A legal principle preventing one party from taking unfair advantage of another when their prior actions or words have led to a reliance by the latter.

Consideration

A core concept in contract law that requires a bargain or something of value to be exchanged between parties for a contract to be valid.

Equitable Estoppel

A legal principle preventing someone from arguing something contrary to a claim if a previous action or agreement implied that claim.