Suppose You Are a Borrower and You Expect Inflation to Be

question 237

Multiple Choice

Suppose you are a borrower and you expect inflation to be 6 percent over the next year because inflation was 6 percent in the last year. If you do not want to pay more than 2 percent in real terms for any loan you take out, you will not borrow if the interest rate is greater than:

• A)2 percent.
• B)6 percent.
• C)8 percent.
• D)30 percent.

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Definitions:

Excitement

A state of aroused enthusiasm, interest, or the emotional stimulation towards an activity or event.

Orgasm

The climax of sexual stimulation, characterized by intense pleasure and release of tension.

Self-Actualization

The motivation to develop one’s full potential as a human being—the highest and most elusive of Maslow’s proposed needs.

Esteem

A social psychological construct representing an individual’s overall subjective emotional evaluation of their own worth.