If Both Borrowers and Lenders Anticipate the Rate of Inflation

question 159

Multiple Choice

If both borrowers and lenders anticipate the rate of inflation correctly, then

• A) borrowers will lose real income.
• B) lenders will lose real income.
• C) both borrowers and lenders will lose real income.
• D) neither borrowers nor lenders will lose real income.

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Definitions:

Kinesthesia

The ability to perceive the position, weight, or motion of muscles, tendons, and joints within the body.

Sensory Interaction

The principle that one sense may influence another, as when the smell of food influences its taste.

Vestibular Sense

Our sense of balance— our sense of body movement and position that enables our sense of balance.

Kinesthesia

The sense that detects body position, weight, or movement of the muscles, tendons, and joints.