Suppose That Over the Past Year,the Real Interest Rate Was

question 117

Multiple Choice

Suppose that over the past year,the real interest rate was 5 percent and the inflation rate was 3 percent.It follows that

• A)the dollar value of savings increased at 5 percent,and the purchasing power of savings increased at 2 percent.
• B)the dollar value of savings increased at 5 percent,and the purchasing power of savings increased at 8 percent.
• C)the dollar value of savings increased at 8 percent,and the purchasing power of savings increased at 2 percent.
• D)the dollar value of savings increased at 8 percent,and the purchasing power of savings increased at 5 percent.

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Definitions:

Variable

An element, feature, or factor that is liable to vary or change; in scientific experiments, it’s something that is controlled or manipulated to test hypotheses.

Normative Economic Reasoning

An approach in economics that reflects judgments about what the economy should be like or what particular policy actions should be recommended.

Financial Aid

Monetary assistance provided to individuals, typically students, to help cover the cost of education expenses.

Post Hoc Ergo Propter Hoc

A logical fallacy that assumes a causal relationship between two events simply because one event followed the other.