Your Local Bank Just Loaned You $1,501

question 82

Multiple Choice

Your local bank just loaned you $1,501. This amount is net of a 10% discount on the loan proceeds, which serves as interest on the loan. You are to repay the loan in one year. What is the effective rate at which you borrowed?

• A) 11.00%
• B) 11.11%
• C) 11.97%
• D) 12.58%
• E) 12.64%

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Definitions:

Allocation of Resources

The process of assigning available resources, or factors of production, to specific uses chosen among many possible and competing alternatives.

Productivity

The assessment of how effectively a person, machine, factory, or system can transform inputs into valuable outputs.

Labor Input

Refers to the total hours worked or the number of employees engaged in production in the economy.

Goods and Services

The tangible products (goods) and intangible activities (services) that satisfy human wants and needs and are offered in the market.