Suppose You Borrow $2000 for One Year and at the End

question 34

Multiple Choice

Suppose you borrow $2000 for one year and at the end of the year you repay the $2000 plus $110 of interest.The expected inflation rate was 2.2% at the time you took out the loan,but the actual inflation rate turned out to be 3.3%.What was the actual real interest rate you paid?

• A) 2.2%
• B) 3.3%
• C) 5.5%
• D) 8.8%

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Definitions:

Buyer Requirement

A set of criteria or needs specified by the customer which a product or service must meet.

Installation

The process of setting up or configuring a product or system so that it is ready for use.

Delivery

Refers to the process of transporting goods from a seller to the purchaser's location.

Credit

Refers to the ability of a consumer or business to borrow money with the promise to repay it, along with any agreed upon interest, at a later date.