Reference: Ref 12-4 (Table: Anticipating Inflation) Using the Inflation Data

question 45

Multiple Choice

Reference: Ref 12-4 (Table: Anticipating Inflation) Using the inflation data in the table above, assume that all loan contracts had fixed nominal interest rates of 10 percent and matured after one year. In which year given below did lenders gain relative to borrowers?

• A) 2000
• B) 2002
• C) 2003
• D) 2004

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Definitions:

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