If the Real Interest Rate Is 4% and the Inflation

question 131

Multiple Choice

If the real interest rate is 4% and the inflation rate is 9%,then the nominal interest rate equals

• A) 4%.
• B) 5%.
• C) 9%.
• D) 13%.
• E) 36%.

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Definitions:

Income Level

The amount of monetary compensation received by an individual or household from various sources, often used as an indicator of economic status or standard of living.

Company's Profit

The financial gain made by a business after subtracting all expenses, taxes, and costs from total revenue.

Defined Benefit Plan

A type of pension plan where the benefits that the employee will receive upon retirement are predefined, usually based on factors like salary and years of service.

Money Purchase Plan

A type of defined contribution retirement savings plan where employer and employee contributions are fixed.