The Higher the Expected Inflation, _____

Multiple Choice

The higher the expected inflation, _____

A) the higher the nominal rate of interest that lenders require and that borrowers are willing to pay.
B) the lower the nominal rate of interest that lenders require and that borrowers are willing to pay.
C) the higher the nominal rate of interest that lenders require and the lower the nominal rate of interest that borrowers are willing to pay.
D) the lower the real interest rate that lenders require.
E) the higher the real interest rate that borrowers are willing to pay.