If Inflation Is Anticipated to Be 5 Per Cent During

question 43

Multiple Choice

If inflation is anticipated to be 5 per cent during the next year, while the real rate of interest for a one-year loan is 5 per cent, then what should the nominal rate of interest be for a risk-free one-year loan?

• A) 5 per cent
• B) 10 per cent
• C) 25 per cent
• D) none of the above

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Definitions:

Optimal Force

The best or most effective force that can be applied in a given situation to achieve a desired outcome.

Undue Fatigue

Excessive tiredness without an obvious cause, not proportional to activity levels.

Mood-Enhancing

Refers to anything that can improve or elevate a person's mood, such as certain activities, foods, or medications.

Physical Exercise

Any bodily activity that enhances or maintains physical fitness, overall health, and wellness.