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%

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Definitions:

Critical Thinking

The objective analysis and evaluation of an issue to form a judgment, often involving skeptical and unbiased reasoning.

Binge Drinking

The consumption of an excessive amount of alcohol in a short period, typically considered as five or more drinks on a single occasion for men, and four or more for women.

Obese

A medical condition characterized by excess body fat accumulated to the extent that it may have a negative effect on health, potentially leading to reduced life expectancy and/or increased health problems.

Overweight

Having a body weight more than what is considered normal or healthy for a certain height, often measured by BMI.