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With No Inflation, a Bank Would Be Willing to Lend

Question 49

Multiple Choice

With no inflation, a bank would be willing to lend a business firm $5 million at an annual interest rate of 6%. But if the rate of inflation was anticipated to be 4%, the bank would most likely charge the firm an annual interest rate of:


A) 2 percent
B) 4 percent
C) 6 percent
D) 10 percent

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