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Question 1: Which of the following instruments do you choose:
Question 2: Which loan should carry a higher interest rate:
Question 3: You want to buy a car. Which option do you choose:
Question 4: You want to buy a house and are offered a 20-year, fixed-rate mortgage at 4% interest per year. A 10-year government bond currently pays 3.5% interest and inflation is running at 3% a year. Is this a good deal?
Question 5: You have the choice between two 1-year government bonds: one pays interest of 3%, the other inflation-adjusted or real interest of 0.5%. Inflation is currently 1% and expected to be stable. Which do you choose?