You Borrow Money to Buy a House in 2007 at a Fixed

question 49

Multiple Choice

You borrow money to buy a house in 2007 at a fixed interest rate of 6.5 percent. By 2010, the inflation rate has steadily fallen to 2.5 percent from the recent high of 4.0 percent in 2007. Considering only your mortgage, is inflation good news or bad news for you?

• A)bad news, because inflation hurts everyone
• B)bad news, because it makes the real value of your mortgage payments increase
• C)good news, because it makes the real value of your mortgage payments decrease
• D)bad news, because it makes the nominal value of your mortgage payments increase

Recognize the principles and effects of employee training on organizational outcomes.

Understand the characteristics of enlightened workplace environments and McGregor’s theories.

Differentiate between effective and ineffective leadership practices.

Acknowledge the role of personal communication and active listening in leadership.

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Definitions:

Obligated

Refers to being bound by a duty, contract, or sense of responsibility to perform a particular action or role.

Social Exchange Theory

A theoretical perspective, based on the principle of reinforcement, that assumes that people will likely choose actions that maximize rewards and minimize costs.

Exchange Network

A social structure that consists of individuals or entities sharing resources and services through a system of transactions.

Group Polarization

In group decision making, the tendency for group members to shift their opinions toward a position that is similar to but more extreme than the positions they held prior to group discussion; both the risky shift and the cautious shift are instances of group polarization.