Suppose the Bank of Montreal Wants a 5% Real Rate

question 106

Multiple Choice

Suppose the Bank of Montreal wants a 5% real rate of return on all its loans,and anticipates an annual inflation rate of 4%.It should therefore lend its money at a nominal interest rate of

• A)10%.
• B)9%.
• C)5%.
• D)4%.
• E)1%.

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Definitions:

Piaget

A Swiss psychologist known for his pioneering work in child development, focusing on how children acquire knowledge and the stages of cognitive growth.

Concrete Operational

A stage in Piaget's theory of cognitive development where children gain the ability to think logically about concrete events.

Cognitive Dimensions

Refers to the range of mental activities and abilities involved in thinking, understanding, learning, and remembering.

Abstract Logic

Abstract logic involves thinking in a way that is not tied to concrete physical reality, allowing for manipulation of ideas and concepts independently.