If the Rate of Inflation in a Given Time Period

question 115

Multiple Choice

If the rate of inflation in a given time period turns out to be lower than lenders and borrowers anticipated, then the effect will be:

• A) a redistribution of wealth from borrowers to lenders.
• B) a redistribution of wealth from lenders to borrowers.
• C) a net loss in purchasing power for lenders relative to borrowers.
• D) a net gain in purchasing power for borrowers relative to lenders.

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Definitions:

Cash Dividend

A cash disbursement from a corporation's earnings to its shareholders.

Common Stock

A type of equity security that represents ownership in a corporation, with shareholders entitled to vote on corporate matters and receive dividends.

Net Income

The amount of total revenues that exceeds total expenses of a company during a specific time period.