Table 24-4
Lee's expenditures on food for three consecutive years, along with other values, are presented in the following table.

-Refer to Table 24-4. If the nominal interest rate was 12 percent in Year 2, then
A)the real interest rate in Year 2 was 6 percent.
B)the real interest rate in Year 2 was 18 percent.
C)Lee's Year 1 food expenditures in Year 2 dollars amount to $5,800.
D)Lee's Year 1 food expenditures in Year 3 dollars amount to $6,200.

Question

Table 24-4
Lee's expenditures on food for three consecutive years, along with other values, are presented in the following table.
​
​
 
-Refer to Table 24-4. If the nominal interest rate was 12 percent in Year 2, then
A)the real interest rate in Year 2 was 6 percent. 
B)the real interest rate in Year 2 was 18 percent. 
C)Lee's Year 1 food expenditures in Year 2 dollars amount to $5,800. 
D)Lee's Year 1 food expenditures in Year 3 dollars amount to $6,200.

Quizplus · Accepted Answer

The real interest rate can be calculated using the formula: real interest rate = nominal interest rate - inflation rate. Without the table, we can't calculate specific values for Lee's expenditures, but if the nominal rate was 12% and the real interest rate was 6%, it implies an inflation rate of 6% (12% - 6% = 6%). This choice does not require specific table data to validate the calculation method.

Table 24-4 Lee's Expenditures on Food for Three Consecutive Years, Along with Along