You Are Paying an Effective Annual Rate of 13

question 90

Multiple Choice

You are paying an effective annual rate of 13.8% on your credit card. The interest is compounded monthly. What is the annual percentage rate on your account?

• A) 11.50%
• B) 12.00%
• C) 13.00%
• D) 13.80%
• E) 14.71%

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Definitions:

Federal Funds Rate

The interest rate charged in the federal funds market; the interest rate banks charge one another for overnight borrowing; the Fed’s target interest rate.

Fiscal Policy

Involves government policies on taxation and spending that aim to influence a country's economic conditions, such as controlling inflation, unemployment, and promoting economic growth.

Transfer Payments

Payments made by the government to individuals through various social benefit programs, without the government receiving any goods or services in return.

Government Purchases

Expenditures by the government for goods and services that directly satisfy public consumption or are invested in public infrastructure.