You Want to Make a 10% Real Return on a Loan

question 228

Multiple Choice

You want to make a 10% real return on a loan that you are planning to make, and the expected inflation rate during the period of the loan is 10%. You should charge a nominal interest rate of

• A) 0%.
• B) 5%.
• C) 10%.
• D) 20%.

---

Definitions:

Punisher

A person or factor that applies a penalty or negative consequence in response to an action, often used in the context of behavior modification.

Unconditioned Response

in classical conditioning, an unlearned, naturally occurring response (such as salivation) to anunconditioned stimulus (US) (such as food in the mouth).

Generalization

The process whereby a response is given to similar stimuli beyond the original stimulus learned.

Acquisition

In psychology, the phase of learning during which a response is established.