You Could Borrow $2,000 Today from Bank a and Repay

question 29

Multiple Choice

You could borrow $2,000 today from Bank A and repay the loan,with interest,by paying Bank A $2,154 one year from today.Or,you could borrow X dollars today from Bank B and repay the loan,with interest,by paying Bank B $2,477.10 one year from today.In order for the same interest rate to apply to the two loans,X =

• A)$2,300.00.
• B)$2,450.00.
• C)$2,500.00.
• D)$2,525.50.

---

Definitions:

Government Purchases

Government Purchases are expenditures on goods and services made by the government, which can influence the economy's aggregate demand.

Recessionary Gap

The difference between the actual output in an economy and the potential output it could achieve with full employment.

Foreign Exchange

The conversion or trading of one currency into another currency.

Federal Budget Deficit

The financial shortfall when a government's expenditures exceed its revenues within a given fiscal year.