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

question 79

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 1 year. Which year did borrowers gain relative to lenders?

• A) 2000
• B) 2001
• C) 2002
• D) 2003

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Definitions:

Shivering

An involuntary response to cold, generating body heat through rapid, rhythmic muscle contractions.

Heating Pads

Devices generating heat, often electrically powered, used to warm parts of the body to relieve pain or discomfort.

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A major artery in the forearm that supplies blood to the hand and arm, palpable at the wrist.