A Bank Lends Money for a Year at an Interest

question 166

Multiple Choice

A bank lends money for a year at an interest rate of 7%, and the inflation rate for that year turns out to be 5%. What is the bank's real rate of return for that year?

• A) 2%
• B) 3.5%
• C) 6%
• D) 12%

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Definitions:

Green Ink Pads

Special ink pads used primarily for stamping, often utilized in art, crafting, or in administrative tasks requiring distinct color coding.

Lerner Index

A measure of a firm's pricing power and market control, calculated as the difference between price and marginal cost, divided by price.

Elastic Demand

A situation where the quantity demanded of a good or service significantly changes in response to a change in its price.

Lerner Index

An economic measure of a firm's market power, calculated as the difference between price and marginal cost relative to price, indicating the degree of monopoly power.