Question

QUESTION 29 A lender demands an interest rate in part to compensate for any expected ___________, so that the money that is repaid in the future will have at least as much buying power as the money that was originally loaned a. compound interest b. risk premium c. inflation d. trade deficit 1 points

QUESTION 30 In the long run, the most important source of increase in a nation's standard of living is a: a. high rate of labor force growth b. zero rate of population growth c. high rate of consumption d. high rate of economic growth

Answer 1

1.

Option c

inflation

Inflation is a consistent rise in prices over a period of time. A rise in inflation can reduce the purchasing power of money. Hence the lender demands an interest rate in part to compensate for any expected inflation.

2.

d

high rate of economic growth

The rate of economic growth is the rate by which the economy has been growing over a period of time. It is considered the best source of an increase in a nation's standard of living