Economists Project the Long-Run Real Growth Rate for the Next

Multiple Choice

Economists project the long-run real growth rate for the next five years to be 2.5 percent and the average annual rate of inflation over this five-year period to be 3 percent. What is the expected nominal rate of return over the next five years?

A) 0.500 percent
B) 1.056 percent
C) 2.750 percent
D) 5.500 percent
E) 5.575 percent