We can approximate the real return on an investment by subtracting the inflation rate from the nominal return on the investment.
For example, an investment that returns 10 per year while inflation is 4 per year has a real (inflation adjusted) return of approximately 6. Which of the following outcomes is NOT possible? A) Nominal and real returns are positive
B) Nominal return is positive, real return is negative
C) Nominal return is negative, real return is positive
D) all of these outcomes are possible
Question 2
The core inflation rate is typically defined as the change in consumer prices for all goods included in the CPI basket except energy and food products.
Suppose the overall inflation rate based on the CPI was 4 percent for the past year, and energy and food prices did not change during the year. Is the core inflation rate for the past year higher or lower than 4 percent? A) Higher
B) Lower
C) They are the same
D) We do not have enough information to answer this question
Primary production is positively correlated with the evapotranspiration rate.
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