The Real Rate of Interest Is 4% and the Anticipated

question 317

Multiple Choice

The real rate of interest is 4% and the anticipated rate of inflation is 1%. What is the nominal rate of interest?

• A) 1%
• B) 3%
• C) 4%
• D) 5%

---

Definitions:

Rationally Directed

Actions or decisions guided by logical reasoning and systematic analysis of available information, as opposed to those based on emotion or intuition.

Secondary-Process Thinking

A mature type of thinking that operates within the boundaries of logic and reality, in contrast to primary-process thinking which is more primitive and pleasure-oriented.

Freud

Refers to Sigmund Freud, the founder of psychoanalysis, known for his theories of the unconscious mind, the Oedipus complex, and the mechanism of repression.

Reality Principle

A psychoanalytic concept that represents the ability of the mind to assess the external world and act upon it accordingly, as opposed to acting on the pleasure principle.