A Variable-Rate Mortgage

question 51

Multiple Choice

A variable-rate mortgage:

• A)eliminates the risk of expected inflation.
• B)increases the efficiency of the economy.
• C)is offered at an interest rate that increases with inflation.
• D)is a fixed interest rate on a particular loan, but that fixed rate varies depending on the duration of the loan.
• E)shifts the risk of unexpected inflation from the borrower to the lender.

---

Definitions:

Ineffective Encoding

A failure in the process of storing new information in a manner that makes it easy to retrieve later, often leading to forgetfulness.

Elizabeth Loftus

A cognitive psychologist best known for her work on the malleability of human memory and the misinformation effect.

Repressed Memories

Memories unintentionally hidden from consciousness due to their connection with significant trauma or stress.

Memory Malleability

The concept that human memory is not static and can be influenced or changed by various factors, including suggestion, misinformation, and misattribution.