百度文库 - 让每个人平等地提升自我8888 Multiple Choice Questions1. Over the past year you earned a nominal rate of interest of 10 percent on your money. The inflation rate was 5 percent over the same period. The exact actual growth rate of your purchasing power was A) %. B) %. C) %. D) %. E) % Answer: D Difficulty: Moderate Rationale: r = (1+R) / (1+I) - 1; % / % - 1 = %. 2. A year ago, you invested $1,000 in a savings account that pays an annual interest rate of 7%. What is your approximate annual real rate of return if the rate of inflation was 3% over the year? A) 4%. B) 10%. C) 7%. D) 3%. E) none of the above. Answer: A Difficulty: Easy Rationale: 7% - 3% = 4%. 3. If the annual real rate of interest is 5% and the expected inflation rate is 4%, the nominal rate of interest would be approximately A) 1%. B) 9%. C) 20%. D) 15%. E) none of the above. Answer: B Difficulty: Easy Rationale: 5% + 4% = 9%. 百度文库 - 让每个人平等地提升自我8989 4. You purchased a share of stock for $20. One year later you received $1 as dividend and sold the share for $29. What was your holding period return? A) 45% B) 50% C) 5% D) 40% E) none of the above Answer: B Difficulty: Moderate Rationale: ($1 + $29 - $20)/$20 = , or 50%. 5. Which of the following determine(s) the level of real interest rates? I)the supply of savings by households and business firms II)the demand for investment funds III)the government's net supply and/or demand for funds A) I only B) II only C) I and II only D) I, II, and III E) none of the above Answer: D Difficulty: Moderate Rationale: The value of savings by households is the major supply of funds; the demand for investment funds is a portion of...