You Lend $5,000 to a Friend for One Year at a Nominal

question 222

Multiple Choice

You lend $5,000 to a friend for one year at a nominal interest rate of 10%.Inflation during that year is 5%.As a result,you will receive ________ at the end of the year,but that money has a purchasing power of ________.

• A)$5,050; $5,025
• B)$5,100; $5,050
• C)$5,500; $5,250
• D)$6,000; $5,500

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Definitions:

Dichotomous Thinking

Dichotomous thinking is a cognitive process that categorizes experiences, values, and objects into two extreme categories, such as all good or all bad.

Splitting

A defense mechanism often observed in borderline personality disorder, where a person views themselves or others as all good or all bad, with no middle ground.

Borderline Personality Disorder

A mental health disorder characterized by unstable moods, behavior, and relationships, with individuals often experiencing intense episodes of anger, depression, and anxiety.

Psychoticism

Proneness to psychotic-like symptoms, such as illusions.