Neco 2022 Economics Question 40

Practice objective / multiple choice question 40 from the 2022 Neco Economics examination.

Neco 2022 Economics Objective / Multiple Choice Medium Difficulty
Question 40 NECO • 2022 • ECONOMICS • objective

At the end of 2025 the consumer‑price index (CPI) was 150. By the end of 2026 it rose to 165. A commercial bank offers a nominal interest rate of 12\% per annum. (i) Calculate the inflation rate for 2026, (ii) compute the real interest rate using the exact Fisher equation, and (iii) state whether the nominal rate exceeds the inflation rate by at least 2 percentage points.

Answer Options

A. Inflation = 9 %; Real interest ≈ 2.00 %; Nominal rate exceeds inflation by at least 2 pp: Yes
Correct Answer B. Inflation = 10 %; Real interest ≈ 1.82 %; Nominal rate exceeds inflation by at least 2 pp: Yes
C. Inflation = 11 %; Real interest ≈ 1.50 %; Nominal rate exceeds inflation by at least 2 pp: No
D. Inflation = 12 %; Real interest ≈ 2.20 %; Nominal rate exceeds inflation by at least 2 pp: Yes
Correct Answer
B
Correct Option:
Inflation = 10 %; Real interest ≈ 1.82 %; Nominal rate exceeds inflation by at least 2 pp: Yes

About This Question

This is Neco 2022 Economics Question 40. It is one of the objective questions from the 2022 Neco Economics examination.

Difficulty level: Medium .

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