Multiple Choice
If borrowers and lenders anticipate that the rate of inflation will be 5%, but instead it turns out to be 3%, which of the following is likely to occur?
A) The real interest rate is higher than expected.
B) Lenders wish that they had made fewer loans.
C) Borrowers wish that they had borrowed more money.
D) Insufficient loans will have been made by lenders to maintain profit levels.
Correct Answer:
Verified
Correct Answer:
Verified
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