If a Student Borrowed $5, 000 at a Fixed Rate

question 95

True/False

If a student borrowed $5, 000 at a fixed rate of 8.9 percent to pay for this year's college expenses and the annual inflation rate turns out to be 11 percent, then the student's purchasing power for the year has increased.

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Definitions:

Public Goods

Goods that are non-excludable and non-rivalrous, meaning that one person's consumption does not reduce the availability to others, and it's hard to prevent people from using them.

Nonrivalry-in-Consumption

A characteristic of certain goods where one person's consumption does not reduce the availability of the good for consumption by others.

External Benefit

A benefit that results from an economic transaction but is received by individuals or groups who are not direct parties to the transaction.

Economic Efficiency

A situation where the allocation of resources produces the maximum possible satisfaction of our wants without wasting any resources.