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You are thinking about borrowing some money. The nominal interest rate you will pay is 8% and you believe that, over the life of this loan, the...

You are thinking about borrowing some money. The nominal interest rate you will pay is 8% and you believe that, over the life of this loan, the average annual inflation rate will be 3%. Based on this

Select one:

a. the inflation-adjusted interest rate you will pay is 11%b. the cost of borrowing the money, in terms of purchasing power, is 8%c. the real interest rate you will pay is 5%d. the cost of borrowing the money, in terms of purchasing power, is 3%e. the real interest rate you will pay is negative

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1 comment
  • check and mark
    • Sabaexpert
    • Mar 14, 2017 at 11:33pm

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