If the Nominal Interest Rate Is 2

question 64

Multiple Choice

If the nominal interest rate is 2.5 percent and the inflation rate is 2 percent,what is the real interest rate?

• A).5 percent
• B)1.25 percent
• C)4.5 percent
• D)None of the above is correct.

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Definitions:

Terranes

Pieces of the Earth's crust that have distinct geological histories and have been merged onto a continent along a plate boundary.

Accretionary Prism

A wedge-shaped mass of sediment and rock scraped off the top of a downgoing tectonic plate at a convergent plate boundary.

Displaced Granitic Rocks

Granitic rocks that have been moved from their original position by geological forces, often resulting in altered landscapes.

Continents

Large landmasses on Earth's surface, distinguished by convention rather than any strict criteria, typically identified by geographical and cultural factors.