An Investor Loaned Money at 14 Percent with an Expected

Multiple Choice

An investor loaned money at 14 percent with an expected rate of inflation of 11 percent. During the year the actual rate of inflation was 8 percent. The investor's expected real rate of interest was _____ and the realized real rate for the investor was ______?

A) 14 percent; 8 percent.
B) 6 percent; 3 percent.
C) 3 percent; 3 percent.
D) 3 percent; 6 percent.