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You Have Just Taken Out a Loan for $75,000

question 22

Multiple Choice

You have just taken out a loan for $75,000. The stated (simple) interest rate on this loan is 10 percent, and the bank requires you to maintain a compensating balance equal to 15 percent of the initial face amount of the loan. You currently have $20,000 in your checking account, and you plan to maintain this balance. The loan is an add-on installment loan which you will repay in 12 equal monthly installments, beginning at the end of the first month.
-What is the nominal annual add-on interest rate on this loan?

Recognize the role of factors of production in determining supply of goods and services.

Understand the impact of economic growth on job opportunities, wages, and standard of living.

Differentiate between the economic systems (socialism, communism, market economies) and their characteristics.

Understand the business cycle phases, including recession and recovery, and their impact on employment and consumer behavior.

Definitions:

Particular Situation

A specific set of circumstances or context in which an event or study is conducted.

Compulsion

A psychological condition where an individual feels the need to perform specific actions repeatedly in an attempt to reduce anxiety or prevent a perceived negative outcome.

Agoraphobia

An anxiety disorder characterized by an intense fear of being in situations where escape might be difficult or help wouldn't be available if things go wrong.

Social Phobia

A persistent and overwhelming fear of social situations, leading to significant anxiety and avoidance that impair daily functioning.