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    Suppose the Bank of Montreal Wants a 5% Real Rate
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Suppose the Bank of Montreal Wants a 5% Real Rate

Question 106

Question 106

Multiple Choice

Suppose the Bank of Montreal wants a 5% real rate of return on all its loans,and anticipates an annual inflation rate of 4%.It should therefore lend its money at a nominal interest rate of


A) 10%.
B) 9%.
C) 5%.
D) 4%.
E) 1%.

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