Jake Loaned Elwood $5,000 for One Year at a Nominal

question 2

Multiple Choice

Jake loaned Elwood $5,000 for one year at a nominal interest rate of 10 percent.After Elwood repaid the loan in full,Jake complained that he could buy 4 percent fewer goods with the money Elwood gave him than he could before he loaned Elwood the $5,000.From this,we can conclude that the rate of inflation during the year was

• A)-4 percent.
• B)4 percent.
• C)6 percent.
• D)14 percent.

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Definitions:

Defective Furniture

Furniture that has imperfections or faults diminishing its value or utility, often leading to discounts or the need for replacement.

Collection Fee

A charge assessed for the service of collecting delinquent payments on loans or bills.

Credit Card Sales

Credit card sales refer to transactions in which goods or services are purchased by customers using credit cards as the method of payment.

Cash Equivalents

Short-term, highly liquid investments with original maturities of three months or less, easily convertible into a known amount of cash.