What Is the Real Interest Rate Given a Nominal Rate

question 28

Multiple Choice

What is the real interest rate given a nominal rate of 8% and an inflation rate of 4.5%?

• A)8.0%
• B)3.3%
• C)4.9%
• D)4.5%

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Definitions:

Reaction Formation

A psychological defense mechanism where an individual behaves in a way that is directly opposite to their true feelings or impulses.

College Student

An individual enrolled in an institution of higher education to pursue a degree or certificate.

Phallic Stage

A stage in Freudian psychosexual development, occurring from roughly ages 3 to 6, where the libido's focus is on the genital area and themes of difference and identification are explored.

Castrated

The action or practice of removing the testicles of a male animal or human, often leading to sterility and a decrease in certain hormone levels.