If the Inflation Rate Is 10 Percent, What Is a Bank's

question 32

Multiple Choice

If the inflation rate is 10 percent, what is a bank's real rate of return on a loan of $100 at 10 percent interest?

• A)$100
• B)$10
• C)10 percent
• D)0 percent

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Definitions:

Market Price

The current price at which an asset or service can be bought or sold in a particular marketplace.

Government Action

Measures and policies implemented by governmental bodies to address societal, economic, environmental, or political issues.

Economic Goods

Items or services that can satisfy human wants and are scarce in relation to their demand, requiring people to make choices about their use.

Pure Market System

is an economic model where prices for goods and services are determined by open market and consumers, without government intervention.