You lend $5,000 to a friend for one year at a nominal interest rate of 10%. Inflation during that year is 5%. As a result, you will receive ________ at the end of the year, but that money has a purchasing power of ________

People who took out mortgages at the height of U.S. inflation in 1981:

A. paid much higher real interest rates than expected since inflation fell dramatically after 1981. B. paid much lower real interest rates than expected since inflation fell dramatically after 1981. C. paid much higher real interest rates than expected since inflation rose dramatically after 1981. D. paid much lower real interest rates than expected since inflation rose dramatically after 1981.

Critics of an equal distribution of income argue that the effect would be to reduce the incentive to be productive

a. True b. False Indicate whether the statement is true or false