Tony Loaned $1,000 to Dave for One Year, with the Understanding

question 51

Multiple Choice

Tony loaned $1,000 to Dave for one year, with the understanding that Dave would repay $1,070 to Tony.If the actual inflation rate was 7 percent, what was the real rate of interest Tony received?  

• A) 14 percent 
• B) 7 percent 
• C) 4 percent 
• D) 0 percent

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Definitions:

Seventeenth Amendment

Progressive reform passed in 1913 that required U.S. senators to be elected directly by voters; previously, senators were chosen by state legislatures.

Federal Income Tax

A tax levied by the United States federal government on the annual earnings of individuals, corporations, trusts, and other legal entities.

U.S. Senators

Elected officials who serve in the United States Senate, one of the two chambers of the United States Congress, representing their respective states and responsible for making federal laws.

Progressive Reformers

Early 20th-century activists in the United States who sought to address social inequities, corruption, and economic issues through government intervention.