Which of the Following Describes the Correct Relationship Among the Nominal

question 160

Multiple Choice

Which of the following describes the correct relationship among the nominal interest rate,the real interest rate,and the inflation rate?

• A) Real interest rate = nominal interest rate + inflation rate
• B) Real interest rate = nominal interest rate - inflation rate
• C) Nominal interest rate = real interest rate - inflation rate
• D) Inflation rate = real interest rate - nominal interest rate
• E) Inflation rate = nominal interest rate + real interest rate

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Definitions:

Unemployment Benefits

Government payments to individuals who are unemployed and actively seeking work, intended to support them financially.

Purchasing Power

The worth of a currency represented by how much goods or services can be purchased with one unit of that currency.

Recognition Lag

The time delay between when an economic problem or shock occurs and when it is recognized or identified by policymakers.

Political Lag

The delay between a need for policy action being identified and the government implementing the response, often due to bureaucratic or political reasons.