If a Country Has $100 Million of Debt, the Interest

question 79

Multiple Choice

If a country has $100 million of debt, the interest rate on the debt is 10%, and the country does not make any payments on the debt, then at the end of year 3, the debt amount would be:

• A) $121 million.
• B) $110 million.
• C) $133.1 million.
• D) $100 million.

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Definitions:

Reserve Requirements

The portion of depositors' balances that banks must have on hand as cash, mandated by central banking authorities.

Treasury Bills

Short-term government securities issued with a promise to be paid back at a specified future date with a fixed interest rate.

Federal Reserve District Bank

A regional bank of the Federal Reserve System, overseeing banks within a specific district and participating in monetary policy to help regulate the economy.

Duluth

A port city in the U.S. state of Minnesota, known for its shipping, cultural activities, and as a gateway to Lake Superior.