Assume That Sarah Agrees to Lend $100 to Sam for One

question 81

Multiple Choice

Assume that Sarah agrees to lend $100 to Sam for one year. Sam agrees to pay Sarah $110 at the end of the year. If inflation over that one year is 7%, what real rate of interest does Sarah earn on her $100?

• A)10%
• B)17%
• C)7%
• D)13%
• E)3%

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