If You Lend a Dollar for a Year and at the End

Multiple Choice

If you lend a dollar for a year and at the end of the year the price level has risen by 10 percent

A) the purchasing power of your loan has risen over the year regardless of the interest rate at which you lent it.
B) the purchasing power of your loan has remained constant over the year regardless of the interest rate at which you lent it.
C) you must have earned a nominal interest rate of 10 percent to maintain the purchasing power of your loan.
D) you must have earned a nominal interest rate of 5 percent to maintain the purchasing power of your loan.