You Borrow $10,000 from a Bank for One Year at a Nominal

question 247

Multiple Choice

You borrow $10,000 from a bank for one year at a nominal interest rate of 5%.If inflation over the year is 2%,what is the real interest rate you are paying?

• A)2%
• B)2.5%
• C)3%
• D)5%

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Definitions:

Leadership Position

A role or office held by an individual that entails guiding and directing a group towards achieving certain goals or objectives.

Fly Whisk

A handheld device typically made from horsehair or other fibers attached to a handle, used to swat away flies or as a ceremonial symbol.

Magnify Gestures

The amplification or exaggeration of body movements or gestures, often used in performance art or theater to convey emotions or narratives more effectively.

Inland Floodplain

A flat area of land adjacent to a river or stream that experiences occasional or periodic flooding, important for its natural ecosystem and sometimes for agriculture.