During a period of high inflation:
A. borrowers are better off because they can pay off their loans with currency that is worth less.
B. borrowers are worse off because they have to pay off their loans with currency that is worth more.
C. lenders are worse off because they cannot find anyone who wants a loan.
D. lenders are worse off because they are repaid with currency that is worth more.
E. none of the above.
Ans: A. borrowers are better off because they can pay off their loans with currency that is worth less.
You might also like to view...
When tax code changes reduce saving incentives, the interest rate will _____ and investment will _____
Fill in the blank(s) with correct word
Suppose that Paraguay and Guyana are both engaged in the production of soybeans and grapefruit, and that Paraguay has an absolute advantage in the production of both goods. If Guyana has a comparative advantage in the production of soybeans, then Guyana
A. should continue to produce soybeans, but only for domestic consumption, because trade is not a viable option. B. has a lower opportunity cost for producing soybeans, but specialization is not feasible because Paraguay has a lower monetary cost of soybean production. C. has a lower opportunity cost for soybeans, which means that it should specialize in production of soybeans and engage in trade. D. has a higher opportunity cost for soybeans, which means it should specialize in the production of grapefruit and engage in trade.