Asked by Charol Pelagio on May 13, 2024
Verified
The real risk-free rate of interest is determined by the Federal Reserve.
Real Risk-free Rate
The rate of return on an investment with no risk of financial loss, adjusted for inflation.
Federal Reserve
The central banking system of the United States, responsible for implementing monetary policy, regulating banks, and ensuring financial stability.
- Comprehend the principles of interest rates and their impact on the economy.
Verified Answer
SA
Steven AldridgeMay 19, 2024
Final Answer :
False
Explanation :
The real risk-free rate of interest is not determined by the Federal Reserve. It is determined by the supply and demand of capital in the economy and is influenced by various factors such as inflation, economic growth, and market expectations. The Federal Reserve may indirectly affect the real risk-free rate through its monetary policy decisions, but it is not the sole determinant.
Learning Objectives
- Comprehend the principles of interest rates and their impact on the economy.
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