Given an Inflation Rate of 3

question 57

Multiple Choice

Given an inflation rate of 3.24%,and a short-term municipal bond offers a rate of 2.9%,which of the following statements 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.
• E)Interest rates must have risen during the year.

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Definitions:

Associative Network

A theory that describes how ideas, images, and thoughts are linked together in the mind, creating a web of interconnected knowledge.

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The combination of characteristics or qualities that form an individual's distinctive character, influencing their behaviors, thoughts, and feelings.

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The surrounding physical and social context in which an individual is currently situated.