A Bank Lends Money for a Year at an Interest

question 142

Multiple Choice

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

• A) 2 percent
• B) 3.5 percent
• C) 6 percent
• D) 12 percent

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Definitions:

Indispensability

The quality of being absolutely necessary or essential within a particular context or system.

Truth-Wins Rule

A consensus-reaching technique wherein a group adopts the correct or most accurate answer once a sufficient number of members recognize its validity.

Conjunctive Task Solutions

Solutions to problems that require the coordination and collective effort of all group members, where the performance of the group is determined by its weakest link.

Steiner's Law

A principle in social psychology that outlines how group productivity is determined by the sum of individual members' contributions, subject to the effects of coordination and motivation.