What Annual Rate of Return Is Implied on a $700

question 68

Multiple Choice

What annual rate of return is implied on a $700 loan taken next year when $800 must be repaid in year 3?

• A) 4.55 percent
• B) 4.76 percent
• C) 6.90 percent
• D) 7.14 percent

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Definitions:

Monetary Policy

Actions undertaken by a central bank, such as the Federal Reserve, to control the money supply and interest rates to achieve macroeconomic objectives like controlling inflation.

Timing Lags

Delays between the implementation of monetary or fiscal policy and the observable effects of these policies on the economy.

Open Market

A freely competitive market in which any buyer or seller can participate, and prices are determined by supply and demand forces.

Goals Of Monetary Policy

The objectives pursued by a country's central bank, including controlling inflation, managing employment levels, and maintaining currency stability.