Use the Following to Answer Questions: Table: Anticipating Inflation -(Table: Anticipating Inflation) Using the Inflation Data in the Table

question 217

Multiple Choice

Use the following to answer questions: Table: Anticipating Inflation $$\begin{array} { l c c } \hline \text { Year } & \text { Predicted Inflation Rate } & \text { Actual Inflation Rate } \\\hline 2000 & 3 \% & 3 \% \\2001 & 3 \% & 2 \% \\2002 & 7 \% & 9 \% \\2003 & 5 \% & 4 \% \\2004 & 4 \% & 7 \% \\\hline\end{array}$$
-(Table: Anticipating Inflation) Using the inflation data in the table above, assume that all loan contracts have fixed nominal interest rates of 10% and mature after one year. Which year did lenders gain relative to borrowers?

• A) 2000
• B) 2002
• C) 2003
• D) 2004

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Definitions:

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The path taken by an object in space that revolves around another object in an ellipse shape, typical of planets and comets in our solar system.

Kepler

A German mathematician and astronomer known for his laws of planetary motion, which provided one of the foundations for Isaac Newton's theory of universal gravitation.