The Consumer Price Index Was 120 in 2013 and 126

question 115

Multiple Choice

The consumer price index was 120 in 2013 and 126 in 2014.The nominal interest rate during this period was 8 percent.What was the real interest rate during this period?

• A)3 percent
• B)2 percent
• C)3.3 percent
• D)12.8 percent

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Definitions:

Net Income

The amount of profit a company generates after all expenses, taxes, and costs have been subtracted from total revenue.

Withdrawals

Amounts of money taken out from a business by its owner(s) for personal use.

Provision

An amount set aside in the accounts of a company to cover a future liability or decrease in the value of an asset.

Accounts Receivable

Liabilities of customers to a firm for provisions or merchandise that have been delivered but payment is outstanding.