Asked by
JOHN PAUL SANDY O. ENCINARES
on Oct 19, 2024
Verified
The nominal interest rate is 10%. The real interest rate is 4%. The inflation rate must be ________.
A) −6%
B) 4%
C) 5.77%
D) 14.4%
Nominal Interest Rate
The stated rate of interest without adjustment for inflation or other factors.
Real Interest Rate
The interest rate adjusted for inflation, reflecting the real cost of borrowing or the real yield on an investment.
Inflation Rate
The percentage increase in the general level of prices for goods and services in a country over a period, typically measured annually.
- Familiarize yourself with the relationship among the money supply, interest rates, inflation, and economic activity.
Verified Answer
LC
Learning Objectives
- Familiarize yourself with the relationship among the money supply, interest rates, inflation, and economic activity.