Bridget Wants to Make an 8% Real Return on a Loan

question 52

Multiple Choice

Bridget wants to make an 8% real return on a loan that she is planning to make, and the expected inflation rate during the period of the loan is 10%. She should charge an interest rate of:

• A) 18%.
• B) - 2%.
• C) 8%.
• D) 2%.

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Definitions:

Produce Mucus

The process by which mucous membranes secrete mucus, a thick protective fluid.

Mucus

A thick, slippery substance produced by the mucous membranes and glands, used to lubricate and protect certain parts of the body like the respiratory tract.

Goblet Cells

Specialized epithelial cells that produce and secrete mucus onto mucosal surfaces, such as the respiratory and digestive tracts.

Endocrine Cells

Specialized cells that secrete hormones directly into the blood.