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Assume That Sarah Agrees to Lend $100 to Sam for One

question 96

Multiple Choice

Assume that Sarah agrees to lend $100 to Sam for one year.Sam agrees to pay Sarah $110 at the end of the year.If inflation over that one year is 7%,what real rate of interest does Sarah earn on her $100?

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Definitions:

Schachter's

Refers to Stanley Schachter's theory, which suggests that emotion is based on two factors: physiological arousal and the cognitive interpretation of that arousal.

Autonomic Arousal

A physiological response that involves the autonomic nervous system, affecting heart rate, respiration, and other involuntary functions, typically in reaction to stress or excitement.

Display Rules

Socially learned guidelines that dictate how emotions should be expressed based on cultural norms, contexts, and relationships.

Cultural Norms

Shared expectations and rules that guide behavior of people within social groups, societies, or cultures.

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