If the Nominal Interest Rate Is 2

question 64

Multiple Choice

If the nominal interest rate is 2.5 percent and the inflation rate is 2 percent,what is the real interest rate?

• A).5 percent
• B)1.25 percent
• C)4.5 percent
• D)None of the above is correct.

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Definitions:

Overdrive

Any drivetrain arrangement in which an output speed exceeds input speed. For instance, most transmissions have overdrive ratio options, meaning that transmission tailshaft speed exceeds engine crankshaft speed.

Slip Spline

A mechanical feature allowing axial movement between shaft sections, facilitating changes in length during operation.

Driveshaft Assembly

A mechanical component used to transmit torque from the vehicle's engine to its wheels.

Chassis

The base frame of a vehicle to which various components are attached.