The Effective Interest Rate Generally Is ________

question 157

Multiple Choice

The effective interest rate generally is ________.

• A) higher on a loan if interest is paid at maturity
• B) lower if the loan is a discount loan
• C) higher if the loan is a discount loan
• D) not affected by whether the loan is a discount loan or a loan with interest paid at maturity

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Definitions:

Inferior Good

An inferior good is a type of good whose demand decreases when consumer income rises, unlike normal goods, where demand increases with rising consumer income.

Normal Good

A type of good for which demand increases when income increases, and vice versa, displaying a positive correlation between income and demand.

Cross Elasticity of Demand

A measure of how the quantity demanded of one good responds to a change in the price of another good, indicating the degree of substitutability or complementarity between the two goods.

Motor Oil

A lubricant used in internal combustion engines to reduce friction, protect against wear, and maintain engine cleanliness.