If You Lend a Dollar for a Year and at the End

question 68

Multiple Choice

If you lend a dollar for a year and at the end of the year the price level has risen by 10 percent,

• A) you must have earned a nominal interest rate of 10 percent to maintain the purchasing power of your loan.
• B) you must have earned a nominal interest rate of 5 percent to maintain the purchasing power of your loan.
• C) the purchasing power of your loan has risen over the year regardless of the interest rate at which you lent it.
• D) the purchasing power of your loan has remained constant over the year regardless of the interest rate at which you lent it.

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Definitions:

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Stakeholder Responsibility

The obligations of an organization towards individuals or groups that have a stake in its operations and decisions, including employees, customers, and the community.

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