If You Lend a Dollar for a Year and at the End

question 87

Multiple Choice

If you lend a dollar for a year and at the end of the year the price level has risen by 10 percent

• A) the purchasing power of your loan has risen over the year regardless of the interest rate at which you lent it.
• B) the purchasing power of your loan has remained constant over the year regardless of the interest rate at which you lent it.
• C) you must have earned a nominal interest rate of 10 percent to maintain the purchasing power of your loan.
• D) you must have earned a nominal interest rate of 5 percent to maintain the purchasing power of your loan.

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Definitions:

Dominant Hand

The hand that is most used by an individual for performing tasks, showing better manual dexterity and coordination.

Left Hemisphere

The left side of the brain, typically associated with linguistic abilities, logical reasoning, and analytical tasks.

Strings of Digits

Sequences of numerical digits, which can be used in various contexts such as passwords, mathematical calculations, or data entry.

Left Hand

The non-dominant hand for the majority of people, controlled by the right hemisphere of the brain, often associated with tasks requiring spatial and nonverbal processes.