Yvonne Takes Out a Fixed-Interest-Rate Loan and Then Inflation Turns

question 83

Multiple Choice

Yvonne takes out a fixed-interest-rate loan and then inflation turns out to be higher than she had expected it to be.The real interest rate she pays is

• A)higher than she had expected,and the real value of the loan is higher than she had expected.
• B)higher than she had expected,and the real value of the loan is lower than she had expected.
• C)lower than she had expected,and the real value of the loan is higher than she had expected.
• D)lower then she had expected,and the real value of the loan is lower than she had expected.

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Definitions:

Variation

The degree to which data points in a statistical distribution or data set diverge from the average or mean.

Degrees of Freedom

The number of independent values or quantities which can be assigned to a statistical distribution, minus the number of parameters estimated.

Number of Treatments

The total count of distinct experimental conditions applied in research to assess their effects on outcomes.

MSB

Marginal Social Benefit; the additional benefit to society from one more unit of a good or service being produced and consumed.