The Following Table Lists Some Economic Agents and Their Intentions

question 71

Multiple Choice

The following table lists some economic agents and their intentions. At present the interest rate is 5 percent.

-Refer to the table above.You learn that currently the nominal interest rate lies below the real interest rate.From this you can infer that ________.

• A) inflation is positive, and Sophie will end up paying her loan off faster than expected
• B) inflation is negative, and Sophie will end up paying her loan off slower than expected
• C) inflation is negative, and Sophie will end up paying off her loan faster than expected
• D) inflation is negative, and Sophie will end up paying off her loan slower than expected

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Definitions:

Anxiety

A feeling of worry, nervousness, or unease about something with an uncertain outcome, often reflecting a concern about future events.

Two-Factor

The theory that suggests emotions are based on physiological arousal and cognitive labeling.

Arousal

A physiological and psychological state of being awoken or stimulated to action, often associated with increased physical activity and alertness.

Vulnerability Stress

This concept relates to how preexisting vulnerabilities in an individual can exacerbate their reaction to stress, potentially leading to worsened outcomes.