Multiple Choice
Cole puts money into an account. One year later, he sees that he has 4 percent more dollars and that his money will buy 3 percent more goods. Which of the following is consistent with these facts?
A) The nominal interest rate was 4 percent, and the inflation rate was 1 percent.
B) The nominal interest rate was 4 percent, and the inflation rate was 7 percent.
C) The nominal interest rate was 7 percent, and the inflation rate was -7 percent.
D) The nominal interest rate was 1 percent, and the inflation rate was -1 percent.
Correct Answer:
Verified
Correct Answer:
Verified
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