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Imagine That You Borrow $1,000 for One Year and at the End

Question 195

Multiple Choice

Imagine that you borrow $1,000 for one year and at the end of the year you repay the $1,000 plus $100 of interest.If the inflation rate was 7%,what was the real interest rate you paid?


A) 17 percent
B) 10 percent
C) 7 percent
D) 3 percent

Correct Answer:

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