Borrowers with Fixed Rate Mortgages Generally Benefit If Actual Inflation

question 13

True/False

Borrowers with fixed rate mortgages generally benefit if actual inflation is higher than expected inflation.

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Definitions:

Drive-reduction Theory

A theory of motivation proposing that the presence of a need creates a drive to eliminate or satisfy that need, thereby restoring balance or homeostasis.

Homeostasis

The process by which biological systems tend to maintain stability while adjusting to conditions that are optimal for survival.

Primary Drives

Basic, innate urges that motivate behavior necessary for survival, such as hunger, thirst, sleep, and avoidance of pain.

Secondary Drives

Learned drives that are derived from primary drives or arising from learned associations with satisfying basic needs.