In 2007, Interest Rates Were About 4

question 53

Multiple Choice

In 2007, interest rates were about 4.5% and inflation was about 2.8%. What was the real interest rate in 2007?

• A) 1.58%
• B) 1.61%
• C) 1.62%
• D) 1.65%

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Definitions:

Optimum Level

The most favorable point or degree at which the efficiency or effectiveness of a function or system is maximized.

MSB Curve

The Marginal Social Benefit curve, representing the additional benefit to society as a whole from consuming one more unit of a good.

MCA Curve

A term that could be mistaken but likely refers to the Marginal Cost Curve, which depicts the additional cost of producing one extra unit of output.

Marginal External Cost

The additional cost incurred by society as a whole due to one more unit of a good being produced, not accounted for by the producer.