If Over the Course of a Year the Inflation Rate

question 9

Multiple Choice

If over the course of a year the inflation rate was about 3.24%, and short-term government bonds offered a rate of 2.9%, which of the following statement is correct?

• A)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.
• B)The real interest rate for investors in these bonds was greater than the rate of inflation.
• C)The nominal interest rate offered by these bonds gave the true increase in purchasing power that resulted from investing in these bonds.
• D)The purchasing power of investors in these bonds grew over the course of the year.

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Definitions:

Prime Working Age

Individuals typically between the ages of 25 and 54, considered to be in their most productive years in the labor force.

Labor-Force Participation Rates

The ratio of the number of individuals actively participating in the labor force to the total number of individuals eligible to participate.

Routine Household Tasks

Involves daily or regular activities required to maintain a household, such as cleaning, cooking, and laundry.

Improved Birth Control

Enhancements or innovations in contraceptive methods that increase effectiveness, accessibility, or user-friendliness.