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Suppose Future Price Changes Are Perfectly Anticipated by Both Borrowers

Question 36

Multiple Choice

Suppose future price changes are perfectly anticipated by both borrowers and lenders.If the price level changed, how would the future real interest rate be affected?  


A)  It would increase. 
B)  It would decrease. 
C)  It would decrease by the amount of the price increase. 
D)  It would remain the same.

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