The Real Interest Rate

question 111

Multiple Choice

The real interest rate

• A) equals the nominal rate minus the prime rate.
• B) increases as inflation increases,ceteris paribus.
• C) is what you really pay if you borrow versus what you think you are paying.
• D) equals the nominal rate plus the rate of inflation.
• E) equals the nominal rate minus the rate of inflation.

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Definitions:

Restricted Contribution

A donation given to an organization with explicit limitations on its use by the donor.

Fixed Assets

Fixed assets, also known as non-current assets, are long-term tangible assets that are used in the operations of a business and are not expected to be consumed or converted into cash within a year.

Restricted Fund Method

An accounting method used by not-for-profit organizations where donations are classified based on donor-imposed restrictions on their use.

Operating Fund

A reserve of cash set aside for the day-to-day financial operations of an organization, business, or government entity.