Which of the Following Statements About Real and Nominal Interest

question 18

Multiple Choice

Which of the following statements about real and nominal interest rates is correct?

• A)When the nominal interest rate is rising,the real interest rate is necessarily rising;when the nominal interest rate is falling,the real interest rate is necessarily falling.
• B)If the nominal interest rate is 4 percent and the inflation rate is 3 percent,then the real interest rate is 7 percent.
• C)An increase in the real interest rate is necessarily accompanied by either an increase in the nominal interest rate,an increase in the inflation rate,or both.
• D)When the inflation rate is positive,the nominal interest rate is necessarily greater than the real interest rate.

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Definitions:

Estimate

A rough calculation or judgment of the value, number, quantity, or extent of something.

Subject Attrition

The loss of participants during the course of a study, which can affect the validity and reliability of the research outcomes.

Generalizability

The extent to which the findings of a study can be applied to other populations, settings, or times.

Internal Validity

Internal validity refers to the extent to which a piece of research accurately measures or tests what it set out to measure or test, without being influenced by external factors. High internal validity means that the study design, conduct, and analysis ensure the study's findings are trustworthy.