If the Real Rate of Interest Is 4% and the Expected

question 45

Multiple Choice

If the real rate of interest is 4% and the expected inflation rate is 7%, a loan at 12%

• A) would reward the lender at the borrower's expense
• B) would reward the borrower at the lender's expense
• C) would penalize the lender at the borrower's expense
• D) none of the above

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Definitions:

Halo Effect

A cognitive bias where the perception of one positive trait in an individual leads to the assumption of other positive traits or abilities.

Self-Serving Bias

A cognitive bias that involves attributing positive events to one's own character but attributing negative events to external factors.

Halo Effect

A mental shortcut where the general perception of an individual, corporation, brand, or product shapes the observer's emotions and opinions regarding that entity's attributes or qualities.

Attractive Faces

Facial features or characteristics that are considered aesthetically pleasing or beautiful according to social or cultural standards.