Which of the Following Combinations of Real Interest Rates and Inflation

question 84

Multiple Choice

Which of the following combinations of real interest rates and inflation implies a nominal interest rate of 6 percent?

• A)a real interest rate of 3 percent and an inflation rate of 2 percent.
• B)a real interest rate of 7 percent and an inflation rate of 1 percent.
• C)a real interest rate of 5 percent and an inflation rate of 1 percent.
• D)a real interest rate of 6 percent and an inflation rate of 1 percent.

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Definitions:

Holder

An individual or entity that possesses a negotiable instrument, such as a check or promissory note, and has the right to enforce it.

Bearer

Pertaining to negotiable instruments, it refers to the individual possessing the document entitled to the rights therein.

Instrument

A legal document formally evidencing a right or obligation, such as contracts, wills, or promissory notes.

Good Faith

A principle that emphasizes honesty, fairness, and integrity in the fulfillment of contractual obligations or in negotiations.