The Higher the Expected Inflation, _____

question 5

Multiple Choice

The higher the expected inflation, _____

• A) the higher the nominal rate of interest that lenders require and that borrowers are willing to pay.
• B) the lower the nominal rate of interest that lenders require and that borrowers are willing to pay.
• C) the higher the nominal rate of interest that lenders require and the lower the nominal rate of interest that borrowers are willing to pay.
• D) the lower the real interest rate that lenders require.
• E) the higher the real interest rate that borrowers are willing to pay.

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