Suppose You Borrow $1,000 Today with the Promise to Pay

question 11

Multiple Choice

Suppose you borrow $1,000 today with the promise to pay back $1,070 one year from today. Based upon this information, the interest rate is __________, and the interest is __________.

• A)$70; 7 percent
• B)7 percent; $1,070
• C)7 percent; $70
• D)$100; 10 percent
• E)10 percent; $100

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Definitions:

Income

Money received, especially on a regular basis, for work or through investments.

Quantity Demanded

Refers to the amount of a good or service that consumers are willing and able to purchase at a given price over a specified period of time.

Price Elastic

Refers to the sensitivity of the demand for a product in response to changes in its price.

Total Revenue

The total amount of money received by a company from its sales of goods or services.