If Both the Lender and Borrower Agree on an 8

question 122

Multiple Choice

If both the lender and borrower agree on an 8% interest rate, both expect a 4% inflation rate, and inflation turns out to be 4%, then ______ by the inflation.

• A)the borrower is hurt and the lender gains
• B)the borrower gains and the lender is hurt
• C)neither the borrower nor the lender are hurt
• D)both the borrower and lender are hurt

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Definitions:

Cash Paid

The total amount of cash disbursed by a business for various purposes, such as operating expenses, purchases, and investments.

Common Shares

A type of equity security that represents ownership in a corporation, entitling holders to vote at shareholders' meetings and to dividends.