Gce Model Questions Vol1 2024 Economics Question 13

Practice objective / multiple choice question 13 from the 2024 Gce Model Questions Vol1 Economics examination.

Gce Model Questions Vol1 2024 Economics Objective / Multiple Choice Medium Difficulty
Question 13 GCE_MODEL_QUESTIONS_VOL1 • 2024 • ECONOMICS • objective

Last year the Consumer Price Index (CPI) was 120 and this year it is 126. A savings account offers a nominal interest rate of 8% per annum.\n(i) Calculate the annual inflation rate.\n(ii) Using the exact Fisher formula, find the real interest rate.\n(iii) Approximate the real interest rate using the Fisher approximation.

Answer Options

Correct Answer A. Inflation 5%; exact real rate 2.86%; approximate real rate 3%
B. Inflation 6%; exact real rate 2.5%; approximate real rate 2.8%
C. Inflation 5%; exact real rate 2.9%; approximate real rate 2.9%
D. Inflation 4%; exact real rate 3.2%; approximate real rate 3.5%
Correct Answer
A
Correct Option:
Inflation 5%; exact real rate 2.86%; approximate real rate 3%

About This Question

This is Gce Model Questions Vol1 2024 Economics Question 13. It is one of the objective questions from the 2024 Gce Model Questions Vol1 Economics examination.

Difficulty level: Medium .

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