If Both Borrowers and Lenders Anticipate the Rate of Inflation

question 159

Multiple Choice

If both borrowers and lenders anticipate the rate of inflation correctly, then

• A) borrowers will lose real income.
• B) lenders will lose real income.
• C) both borrowers and lenders will lose real income.
• D) neither borrowers nor lenders will lose real income.

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Definitions:

Defense Mechanism

Coping techniques that reduce anxiety arising from unacceptable or potentially harmful impulses.

Desire to Harm

An inclination or intention to cause pain, injury, or damage to another individual or entity.

General Anxiety Disorder

A mental health disorder characterized by persistent and excessive worry about various aspects of life that is not proportional to the actual source of worry.

Excessive Worry

A mental state of undue concern about actual or potential problems, leading to significant distress or impairment.