A bank can only loan out its excess reserves

If the prices of goods begin to rise rapidly, people may find it difficult to maintain their lifestyles. Explain why

What will be an ideal response?

If the rate of inflation in a given time period turns out to be lower than lenders and borrowers anticipated, then the effect will be:

a. a redistribution of wealth from borrowers to lenders. b. a redistribution of wealth from lenders to borrowers. c. a net loss in purchasing power for lenders relative to borrowers. d. a net gain in purchasing power for borrowers relative to lenders.