During a Period of Persistent Inflation

question 161

Multiple Choice

During a period of persistent inflation,

• A) borrowers will systematically gain at the expense of lenders.
• B) nominal interest rates will rise and eventually reflect the expected rate of inflation.
• C) once borrowers and lenders fully anticipate the inflation rate, there is no reason to expect that either will systematically gain relative to the other.
• D) both b and c are correct.