Title: QUIZ: Getting Real about Interest Rates -- Economic Lowdown Audio Series
Course: Andria Testing FRE2 > Section: Getting Real about Interest Rates -- Economic Lowdown Audio Series

Q: What is inflation?
- A sustained increase in the average price level of many goods and services
- An increase in the prices of important goods that people need on a regular basis
- A sustained increase in average wages
- An increase in the amount of goods and services available
A: A sustained increase in the average price level of many goods and services

Q: What effect does inflation have on the purchasing power of a dollar?
- A dollar can buy much more than it did before.
- A dollar can buy a little more than it did before.
- A dollar can buy the same as it did before.
- A dollar can buy less than it did before.
A: A dollar can buy less than it did before.

Q: If you deposit money into a bank and receive a 2% interest rate with an inflation rate of 3%, what is the real interest rate earned on your deposit?
- -1%
- 1%
- 5%
- 6%
A: -1%

Q: What is the difference between nominal and real interest rates?
- Nominal interest has been adjusted for inflation.
- Real interest rates have been adjusted for inflation.
A: Real interest rates have been adjusted for inflation.

Q: What percent inflation does the Federal Reserve try to maintain?
- -2%
- 0%
- 2%
- 4%
A: 2%

Q: Who benefits from unexpected inflation?
- Borrowers
- Lenders
A: Borrowers

Q: Who is hurt by unexpected inflation?
- Borrowers
- Lenders
A: Lenders