Neco 2020 Economics Question 30

Practice objective / multiple choice question 30 from the 2020 Neco Economics examination.

Neco 2020 Economics Objective / Multiple Choice Medium Difficulty
Question 30 NECO • 2020 • ECONOMICS • objective

A bank offers a nominal interest rate of 12\% per annum compounded annually. Expected inflation is 8\% per annum. (a) Using the Fisher approximation, find the real interest rate. (b) If \(\text{₦}10,000\) is deposited, what is the real value of the investment after 5 years in today's purchasing power? Give your answer in Naira rounded to the nearest unit.

Answer Options

A. Real rate = 3%; Real value after 5 years = 11593
B. Real rate = 8%; Real value after 5 years = 14693
Correct Answer C. Real rate = 4%; Real value after 5 years = 12167
D. Real rate = 5%; Real value after 5 years = 12763
Correct Answer
C
Correct Option:
Real rate = 4%; Real value after 5 years = 12167

About This Question

This is Neco 2020 Economics Question 30. It is one of the objective questions from the 2020 Neco Economics examination.

Difficulty level: Medium .

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