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Given a Nominal Rate of Interest, the Real Rate of Interest

Question 12

Multiple Choice

Given a nominal rate of interest, the real rate of interest can be computed by


A) multiplying the nominal rate by a price index for the year being studied.
B) subtracting the rate of growth of the economy.
C) subtracting the expected rate of growth of prices in the future.
D) multiplying the nominal rate by the ratio of contemporaneous inflation and unemployment.
E) none of the above.

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