If Your Bank Gives You a $2,000 Loan at 8

question 89

Multiple Choice

If your bank gives you a $2,000 loan at 8% per year,but deducts the interest in advance,is 8% the "real" rate of interest that you will pay?

• A)Yes.
• B)No.The interest rate is actually lower than 8%.
• C)No.The interest rate is actually higher than 8%.
• D)There is not enough information to answer this question accurately.

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Definitions:

Quantity of Money

The total amount of money available in an economy, including all physical money and digital balances, governed by the central bank's monetary policy.

Low Levels of Inflation

A situation characterized by a slow rise in the general level of prices for goods and services over a period, indicating a stable economic environment.

Mechanical Loom

A machine for weaving cloth or tapestry automatically, significantly impacting textile production efficiency.

Cotton Cloth

A durable, versatile fabric made from the fibers of the cotton plant, used in a wide range of garments and textiles.