If Expected Inflation Is Higher Than Actual Inflation, Then

question 109

Multiple Choice

If expected inflation is higher than actual inflation, then:

• A) wealth will be redistributed from lenders to borrowers.
• B) wealth will be redistributed from borrowers to lenders.
• C) both borrowers and lenders will gain wealth.
• D) both borrowers and lenders will lose wealth.

---

Definitions:

Investment Opportunity

A potential venture, asset, or market where investing could yield profitable returns.

Required Rate of Return

The minimum return an investor expects to earn on an investment, considering its risk level and alternative opportunities.

Margin

The difference between the selling price of a product or service and its cost, expressed as a percentage of the selling price.

Turnover

A measure of a company's sales or revenues relative to the average value of its assets, inventory, or employees.