The Real Interest Rate Is the

question 178

Multiple Choice

The real interest rate is the

• A)interest rate corrected for inflation.
• B)interest rate as usually reported by banks.
• C)difference between the interest rate charged by banks on the loans they make and the interest rate paid by banks to their depositors.
• D)difference between the average dividend yield on stocks and the average interest rate on bonds.

---

Definitions:

Financial Assets

Assets that derive value because of a contractual claim, such as bank deposits, stocks, bonds, and investments.

Pension Reserves

Are funds set aside by employers, governments, or other organizations to support employees' retirement benefits.

Real Estate

Property consisting of land and the buildings on it, along with its natural resources such as crops, minerals, or water.

Mutual Fund Shares

Units of ownership in a mutual fund, representing an investor's proportionate stake in the fund's holdings and entitling them to a share of the fund's profits.