Assume that the real rate of interest is 5 percent and a lender charges a nominal interest rate of 15 percent. If a borrower expects that the rate of inflation next year will be 10 percent and the actual rate of inflation next year is 12 percent:
a. neither the borrower nor the lender benefits from inflation.
b. both the borrower and the lender lose from inflation.
c. the borrower benefits from inflation, while the lender loses from inflation.
d. the lender benefits from inflation, while the borrower loses from inflation.
c
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Which of the following trade agreements provides for the development of a single market among its members?
A) World Trade Organization B) European Union C) North American Free Trade Agreement D) Asian Pacific Economic Cooperation
Which of the following is not a question addressed by macroeconomists?
a. Why is average income high in some nations but low in others? b. What, if anything, can the government do to promote growth in incomes, low inflation, and stable employment? c. What is the impact of foreign competition on the U.S. auto industry? d. Why do production and employment expand in some years and contract in others?