You Borrow Money to Buy a House in 2009 at a Fixed

question 76

Multiple Choice

You borrow money to buy a house in 2009 at a fixed interest rate of 5.5 percent. By 2012, the inflation rate has steadily fallen to 1.5 percent from the recent high of 3.0 percent in 2009. Considering only your mortgage, is inflation good news or bad news for you?

• A) bad news, because inflation hurts everyone
• B) bad news, because it makes the real value of your mortgage payments increase
• C) good news, because it makes the real value of your mortgage payments decrease
• D) bad news, because it makes the nominal value of your mortgage payments increase

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Definitions:

Expansion Slot

A socket on a computer motherboard that allows for additional circuit boards to be connected, expanding the computer’s capabilities.

CPU Socket

A receptacle on a motherboard that connects to a computer's central processing unit (CPU).

4-Pin Fan

A cooling fan with a 4-pin connector, allowing for speed control and more efficient cooling performance.

3-Pin Motherboard

A 3-pin motherboard connector is typically used for connecting various types of fans or control circuits, providing power and speed control functionality.