James Took Out a Fixed-Interest-Rate Loan When the CPI Was

question 49

Multiple Choice

James took out a fixed-interest-rate loan when the CPI was 200. He expected the CPI to increase to 206 but it actually increased to 204. The real interest rate he paid is

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

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Definitions:

Alcohol Problems

The challenges and negative consequences associated with excessive or inappropriate consumption of alcohol, including addiction, health issues, and social problems.

Acute Stress Disorder

A mental health condition characterized by the development of severe anxiety, dissociation, and other symptoms that occur within one month after exposure to a traumatic event.

External Locus

A belief system where individuals perceive outcomes in their lives as being outside of their control, influenced by external factors or forces.

Catastrophic Stress

A type of severe stress resulting from an event that is perceived as a disaster, leading to significant emotional, psychological, or physical distress.