If the Real Rate of Return Is 2 Percent, and the Inflation

question 97

Multiple Choice

If the real rate of return is 2 percent, and the inflation rate is 0 percent, then the nominal interest rate must be:

• A) 2 percent.
• B) 0 percent.
• C) 4 percent.
• D) −2 percent.

---

Definitions:

True Differences

Genuine or actual disparities observed between groups or conditions in a study, as opposed to those arising from experimental error or bias.

Discriminant Validity

The degree to which a measurement tool is not correlated with variables from which it should theoretically differ.

Significant Correlations

Statistical relationships between two variables where the association is strong enough to not likely be due to chance.

Constructs

Abstract concepts or theoretical entities that are devised to explain patterns in research, such as intelligence, motivation, or happiness, which are not directly observable.