Imagine That You Borrow $5,000 for One Year and at the End

question 120

Multiple Choice

Imagine that you borrow $5,000 for one year and at the end of the year you repay the $5,000 plus $600 of interest.If the inflation rate was 4%,what was the real interest rate you paid?

• A)16 percent
• B)12 percent
• C)8 percent
• D)6 percent

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Definitions:

Interaction Effects

The influence that the combination of two or more independent variables has on a dependent variable, beyond their individual effects.

Income

The money received, especially on a regular basis, for work or through investments.

Gender

Social and cultural distinctions associated with being male or female, as opposed to biological differences.

Main Effects

The individual impact of each independent variable on the dependent variable in an analysis.