The Real Return from Investing $100 in a Stock for a Year

question 109

Short Answer

The real return from investing $100 in a stock for a year is computed to be 2%. If the nominal return from this investment is 3.5%, what is the expected inflation rate?

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Definitions:

Articles of Confederation

The first constitution of the United States, ratified in 1781, which established a confederation of states with a weak central government, leading to its replacement by the U.S. Constitution in 1789.

National Policy

A strategic plan or framework adopted by a country's government to guide decisions and achieve rational outcomes.

Congress

The national legislative body of the United States, consisting of two houses: the Senate and the House of Representatives.

Republican Motherhood

The idea that women's role was to cultivate civic virtue in their children, thereby contributing to the health of the republic, emphasized in the United States during the late 18th century.