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If a Borrower and Lender Agree to an Interest Rate

Question 40

Multiple Choice

If a borrower and lender agree to an interest rate on a loan when inflation is expected to be 10% and inflation turns out to be 7% over the life of the loan,then the borrower _________ and the lender ________.


A) gains;gains
B) gains;loses
C) is not affected;gains
D) loses;gains
E) loses;loses

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