Given That the Inflation Rate in 2006 Was About 3

question 83

Multiple Choice

Given that the inflation rate in 2006 was about 3.24%,while a short term municipal bond offered a rate of 2.9%,which of the following statement is correct?

• A)The purchasing power of investors in these bonds grew over the course of the year.
• B)The real interest rate for investors in these bonds was greater than the rate of inflation.
• C)Investors in these bonds were able to buy less at the end of the year than they could have purchased at the start of the year.
• D)The nominal interest rate offered by these bonds gave the true increase in purchasing power that resulted from investing in these bonds.

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Definitions:

Defense Mechanism

Psychological strategies used unconsciously by individuals to protect themselves from anxiety or to maintain a sense of self-esteem.

Displacement

The transfer of emotions or reactions from the original source of stimulation to another target.

Severe Punishment

A type of disciplinary action that is much harsher or stricter than usual, intended to deter undesirable behaviors strongly.

Intrarole Conflict

The stress or tension experienced by an individual due to conflicting requirements within the same role.