If Future Price Changes Were Perfectly Anticipated by Both Borrowers

question 91

Multiple Choice

If future price changes were perfectly anticipated by both borrowers and lenders,then _____.

• A)the expected real interest rate would be higher than the actual rate
• B)the expected real interest rate would lower than the actual rate
• C)the real interest rate in the future would decrease by the amount of the price increase
• D)the real interest rate in the future would increase by the amount of the price increase
• E)the real interest rate in the future would remain unchanged

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Definitions:

Wages and Salary

Compensation received by employees for their labor, typically paid as hourly wages or annual salaries.

Taxed

Taxed refers to the imposition of financial charges or other levies upon a taxpayer by a governmental organization in order to fund government spending and various public expenditures.

Percent

A way to express a number as a part of 100, often used to describe proportions and changes in financial and statistical data.

Overtaxed

A condition where individuals or entities are subject to excessive tax rates relative to their income or profit.