With No Inflation, a Bank Would Be Willing to Lend

question 49

Multiple Choice

With no inflation, a bank would be willing to lend a business firm $5 million at an annual interest rate of 6%. But if the rate of inflation was anticipated to be 4%, the bank would most likely charge the firm an annual interest rate of:

• A) 2 percent
• B) 4 percent
• C) 6 percent
• D) 10 percent

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Definitions:

Elk v. Wilkins

A landmark U.S. Supreme Court case in 1884 that held that Native Americans who voluntarily quit their tribes did not automatically gain U.S. citizenship.

Fourteenth and Fifteenth Amendments

Amendments to the United States Constitution, adopted during the Reconstruction era, designed to secure rights for former slaves. The Fourteenth Amendment grants citizenship and equal protection under the laws, while the Fifteenth Amendment prohibits denying the right to vote based on race.

John Wesley Powell

An American explorer, geologist, and ethnologist, known for his pioneering expeditions down the Green and Colorado Rivers and his advocacy for conservation and responsible development of the American West.