The nominal interest rate, i_t, is the rate of return between periods: A) t - 1 and t B) t and t + 1 C) t - 1 and t + 1 D) t and t + 2

Question

Quizplus · Accepted Answer

The nominal interest rate is the rate of return between the current period (t) and the next period (t+1), so the best choice is B, which represents the return between periods t and t+1. The other choices represent returns over longer or shorter periods.

The Nominal Interest Rate, It, Is the Rate of Return

The Nominal Interest Rate, I_t, Is the Rate of Return