If the Real Rate of Return Is 5 Percent, and the Inflation

question 54

Multiple Choice

If the real rate of return is 5 percent, and the inflation rate is 2 percent, then the nominal interest rate must be:

• A) 7 percent.
• B) 3 percent.
• C) −3 percent.
• D) −7 percent.

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Definitions:

Scapula

The Scapula, commonly known as the shoulder blade, is a flat, triangular bone located on the back of the shoulder, connecting the humerus with the clavicle.

Sternum

A long flat bone located in the center of the chest, connected to the ribs via cartilage and forming part of the rib cage.

Humerus

A long bone in the upper arm that runs from the shoulder to the elbow, connecting with various muscles and joints.

Ulna

One of the two long bones in the forearm, extending from the elbow to the smallest finger.