Suppose That You Lend Me $100 for a Year, and That

question 71

Multiple Choice

Suppose that you lend me $100 for a year, and that I agree to pay you $110 at that time (principal plus interest) . Over the intervening year, however, the average price of goods in the economy falls by 4 percent. The real rate of return that you will earn on your loan to me is therefore equal to

• A) 4 percent.
• B) 6 percent.
• C) 10 percent.
• D) 14 percent.
• E) greater than 14 percent.

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Definitions:

Americans

Citizens or nationals of the United States of America, often characterized by a diverse cultural heritage and history.

Transnational Identities

Complex personal and social identities formed by individuals who transcend traditional national boundaries and cultural affiliations, often due to migration, globalization, or digital connectivity.

Global Migrations

Movements of peoples across countries and continents for the purpose of settling, working, or fleeing conflict, which significantly shape economies and societies.

Gilded Age

A term describing the late 19th century in the United States, marked by rapid economic growth, wealth accumulation of a few, and prominent social issues beneath the opulent surface.