Suppose That a Bank Expects Inflation to Be 2% And,accordingly,charges

Multiple Choice

Suppose that a bank expects inflation to be 2% and,accordingly,charges borrowers an interest rate of 4%.Now suppose that inflation is actually 2%.In this case,inflation

A) does not affect the distribution of income.
B) redistributes income from the bank to the bank's borrowers.
C) redistributes income from the bank's borrowers to the bank.
D) redistributes income from the bank to the bank's creditors.
E) redistributes income to the government.