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A Real Rate of Interest of -3 Percent on Money

Question 15

Multiple Choice

A real rate of interest of -3 percent on money that has been loaned indicates:


A) the inflation rate is -3 percent.
B) there is a capital gains tax of 3 percent on the loan.
C) the borrower paid 3 percent less interest this year than last year.
D) the rate of inflation is 3 percent higher than the interest rate on the loan.

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