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If Inflation Is Expected by Both Borrowers and Lenders, Then

Question 53

Multiple Choice

If inflation is expected by both borrowers and lenders, then we would expect


A) real rates to be higher than nominal rates of interest.
B) real rates to be equal to nominal rates of interest.
C) real rates to be lower than nominal rates of interest.
D) nominal rates of interest to be less than the expected inflation rate.

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