If the Real Interest Rate Is 9 Percent and the Expected

question 82

Multiple Choice

If the real interest rate is 9 percent and the expected inflation rate is 2 percent,what would a person expect to have after a year?

• A) 7 percent more dollars,which will purchase 7 percent more goods
• B) 7 percent more dollars,which will purchase 9 percent more goods
• C) 11 percent more dollars,which will purchase 7 percent more goods
• D) 11 percent more dollars,which will purchase 9 percent more goods

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Definitions:

Ties

Articles of clothing, typically narrow strips of fabric worn around the neck under the collar, primarily by men for decorative purposes.

Shirts

Pieces of clothing for the upper body, typically with sleeves and a front opening, made for both genders.

Budget Constraint

The limitation on the consumption bundles that a consumer can afford given their income and the prices of goods and services.

Budget Constraint

A limiting factor that individuals or organizations face when deciding how to allocate available resources to meet their needs and desires.