In the country of Hyrkania,the CPI in 2000 was 120 and the CPI in 2001 was 132.Jake,a resident of Hyrkania,borrowed money in 2000 and repaid the loan in 2001.If the nominal interest rate on the loan was 12 percent,then the real interest rate was
A) 12 percent.
B) 10 percent.
C) 2 percent.
D) impossible to determine without knowing the base year for the CPI.
Correct Answer:
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