You Borrow $10,000 from a Bank for One Year at a Nominal

question 247

Multiple Choice

You borrow $10,000 from a bank for one year at a nominal interest rate of 5%.If inflation over the year is 2%,what is the real interest rate you are paying?

• A)2%
• B)2.5%
• C)3%
• D)5%

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Definitions:

State-dependent Memory

The phenomenon where information learned in a particular state of consciousness is more easily recalled when in that same state of consciousness.

Drug Influence

The impact that the consumption of drugs can have on an individual's physical and mental health, behavior, and decision-making capabilities.

Implicit Memory

The type of memory involved in performing tasks without conscious awareness of the previously learned processes.

Priming

A technique in psychology used to train people's memory both in positive and negative ways by presenting them with a stimulus and then using it to influence their response to another stimulus.