Mary takes out a fixed interest rate loan and then inflation rises more than expected. The real interest rate she pays is
A. higher than she'd expected, and the real value of the loan rises.
B. higher than she'd expected, and the real value of the loan falls.
C. lower than she'd expected, and the real value of the loan rises.
D. lower then she'd expected, and the real value of the loan falls.
Ans: D. lower then she'd expected, and the real value of the loan falls.
Economics
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