If You Expect That the Inflation Rate Is 5 Percent

question 32

Multiple Choice

If you expect that the inflation rate is 5 percent and the actual inflation rate turned out to be exactly 3 percent, then:

• A) lenders gain.
• B) borrowers gain.
• C) both the borrowers and lenders gain.
• D) neither borrowers nor lenders gain.

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Definitions:

Exchange-Listed Stocks

Shares of companies that are traded on a formal exchange, such as the New York Stock Exchange or Nasdaq.

Corporate Ownership

The legal ownership of a corporation, typically represented by shares of stock which provide voting rights and potential dividends to their holders.

Common Stock

Shares that give owners voting rights but only residual claims to the firm’s assets and income distributions.

Not-For-Profit Cooperative

An organization owned and operated by its members with the primary goal of meeting their needs and aspirations without seeking to make a profit.