Suppose that at the beginning of a loan contract, the real interest rate is 4% and expected inflation is currently 6%. If actual inflation turns out to be 7% over the loan contract period, then
A) lenders gain 3% of the loan value. B) borrowers lose 3% of the loan value.
C) lenders gain 1% of the loan value. D) borrowers gain 1% of the loan value.
D
Economics
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According to historian Charles Beard's analysis and interpretation, the Constitution was
(a) divinely inspired. (b) strongly favored by the vast majority of the colonists. (c) influenced by the economic self-interest of the delegates to the Constitutional Convention. (d) of little importance to future economic growth.
Economics
When there is a recessionary gap, inflation will ________, in response to which the Federal Reserve will ________ real interest rates, and output will ________.
A. decline; lower; decline B. increase; raise; decline C. decline; lower; expand D. decline; raise; decline
Economics