Suppose That at the Target Inflation Rate of 2

question 89

Multiple Choice

Suppose that at the target inflation rate of 2.5 percent the nominal interest rate is 4 percent. This means that at the target inflation rate, the central bank wants the real interest rate to equal

• A)6.5 percent.
• B)4.0 percent.
• C)2.5 percent.
• D)1.5 percent.
• E)Not enough information is given to answer this question.

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Definitions:

Haitian Revolution

A successful anti-slavery and anti-colonial insurrection by self-liberated slaves against French colonial rule in Saint-Domingue, now the sovereign nation of Haiti, from 1791 to 1804.

Thomas Jefferson

The third President of the United States (1801-1809), principal author of the Declaration of Independence (1776), and one of the most influential Founding Fathers for his promotion of the ideals of democracy and republicanism.

Independent Nation

A sovereign state with complete autonomy and self-governance, not controlled by any foreign power.

Whiskey Rebellion

A tax protest in the United States in the 1790s, the first major challenge to the new government's authority, showing federal power by quelling the rebellion.