Suppose a Loan of $100 Is Made at a Fixed

question 32

Multiple Choice

Suppose a loan of $100 is made at a fixed nominal interest rate of 5% for one year. During the year,there is unexpected inflation of 7%. Which of the following is true?

• A) The inflation has redistributed income from the lender to the borrower
• B) The real rate of interest is 12%
• C) The borrower will be obligated to repay $107 instead of $105
• D) The real rate of interest is 2%
• E) None of the above

Grasp the relationship between the production/use of capital and labor productivity, along with its effects on wages.

Understand the conditions for profit maximization in terms of resource allocation.

Recognize how shifts in factor demand result from changes in various economic conditions.

Understand the concept of rent and the factors determining it.

---

Definitions:

Pictorial Depth Cues

Visual indicators that can imply depth in a drawing, painting, or photograph.

Texture Gradients

A visual cue used to suggest depth in an image, where the texture becomes denser with distance.

Linear Perspective

A visual depth cue in which parallel lines appear to converge as they recede into the distance, aiding in depth perception.

Relative Height

In the field of perception, it refers to the concept that objects closer to the horizon in our field of vision appear further away than objects further from the horizon, aiding in depth perception.