If the Current Inflation Rate Is 5%,then the Nominal Rate

question 56

Multiple Choice

If the current inflation rate is 5%,then the nominal rate necessary for you to earn an 8% real interest rate on your investment is closest to:

• A)13.0%.
• B)13.4%.
• C)4.9%.
• D)3.0%.

---

Definitions:

Labour Market Value

The value that the labor workforce adds to the production of goods or services, often reflected in the wages that employers are willing to pay for specific skills or jobs.

Firm-specific Human Capital

The unique skills, knowledge, and abilities that employees develop through working at a specific firm, contributing to its competitive advantage.

Generic Human Capital

Skills and knowledge that are not specific to a particular job or company but are valuable across different roles and industries.

Human Capital Theory

An economic theory which posits that investing in education and training enhances the productivity and efficiency of individuals, hence contributing to a country's economic development.