Suppose That You Lend Me $100 for a Year,and That

question 2

Multiple Choice

Suppose that you lend me $100 for a year,and that I agree to pay you $110 at that time (principal plus interest) .Over the intervening year,however,the average price of goods in the economy falls by 4%.The real rate of return that you will earn on your loan to me is therefore equal to

• A)4%.
• B)6%.
• C)10%.
• D)14%.
• E)greater than 14%.

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Definitions:

Wheel Axle

A simple machine comprising a wheel attached to a rod (axle), used to transfer force and motion effectively.

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Trip Report

A document summarizing the events, observations, and outcomes of a business trip, often shared to communicate insights gained during the travel.