Which of the Following Combinations of Nominal Interest Rates and Inflation

question 220

Multiple Choice

Which of the following combinations of nominal interest rates and inflation implies a real interest rate of 7 percent?

• A)a nominal interest rate of 5 percent and an inflation rate of 4 percent.
• B)a nominal interest rate of 4 percent and an inflation rate of 3 percent.
• C)a nominal interest rate of 8 percent and an inflation rate of 1 percent.
• D)a nominal interest rate of 14 percent and an inflation rate of 2 percent.

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Definitions:

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A legal principle specifying the conditions or time frames within which a remedy, such as filing a lawsuit or making a claim, must be initiated.

Prima Facie Unconscionable

A legal term indicating that an agreement or term appears, at first sight, to be excessively unfair or unjust.

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A body of law developed through court decisions over time, as opposed to laws enacted by legislatures (statutory law).