The Interest Rate

question 38

Multiple Choice

The interest rate

• A) equals the expected rate of return minus depreciation.
• B) expresses the relationship between saving and disposable income.
• C) has no effect on the volume of investment in the economy.
• D) is another name for profit.
• E) is the annual amount a borrower must pay for the use of a dollar.

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Definitions:

Liable

Responsible by law; legally obligated to compensate for harm or damage caused.

Contract

A contract recognized by law, involving at least two parties, each with obligations to the other.

Principal

The original amount of money invested or loaned, before interest, or the primary party engaged in a contract or transaction.

Authority

The legal power or right given to an individual or entity to make decisions, and enforce obedience.