By 1981, interest rates had reached historic highs with the Federal Reserve setting the benchmark rate at 20 percent in January of that year. The average mortgage rate exceeded 16 percent, and the prime lending rate reached 21.5 percent. Therefore, the interest rates were about 15 percent (option C is correct).

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By 1981

Question 69

Multiple Choice

By 1981

A) interest rates were about 5 percent.
B) interest rates were about 7 percent.
C) interest rates were about 15 percent.
D) the real interest rate was negative.
E) the real interest rate was positive,but the nominal interest rate was less than the real rate.

Correct Answer: