Author Question: Assume you borrow 1,000 on credit cards at an annual interest rate of 10 percent. If the inflation ... (Read 36 times)

bobthebuilder · **on:** Jun 30, 2018

Assume you borrow 1,000 on credit cards at an annual interest rate of 10 percent. If the inflation rate is 12 percent during the year and the debt has to be paid back in 12 months, then:
a. income will be redistributed from you to the bank.
b. the real return for the bank will be greater than initially expected.
c. you will repay the bank with fewer dollars than you borrowed.
d. the dollars repaid will have less purchasing power than those borrowed.
e. the bank will obtain the same return on the loan as initially expected.

Question 2

Which of the following forces us to choose among alternatives?
a. Value
b. Scarcity
c. Rarity
d. Market mechanism