The Benefit of Saving Is the

question 226

Multiple Choice

The benefit of saving is the

• A) nominal interest rate.
• B) real interest rate.
• C) inflation rate.
• D) saving rate.
• E) rate of capital gains.

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Definitions:

Real Rate of Interest

Real Rate of Interest is the interest rate that has been adjusted to remove the effects of inflation, providing a more accurate measure of the cost of borrowing.

Rate of Inflation

This refers to the annual percentage increase in the general price level of goods and services in an economy over a period of time.

Effective Usury Laws

Laws designed to set maximum interest rates that can be charged on loans, to prevent lenders from charging excessively high rates.

Money Markets

Financial markets for short-term borrowing and lending, dealing in securities such as Treasury bills and commercial paper.