With no inflation, a bank would be willing to lend a business firm $5 million at an annual interest rate of 6 percent. But, if the rate of inflation was anticipated to be 4 percent, the bank would most likely charge the firm an annual interest rate of:
A. 10 percent.
B. 2 percent.
C. 6 percent.
D. 4 percent.
Answer: A
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What will be an ideal response?
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What will be an ideal response?