Suppose the Rate of Inflation Unexpectedly Decreases from 7% to 4

question 84

Multiple Choice

Suppose the rate of inflation unexpectedly decreases from 7% to 4%. Which one of the following would most likely benefit from this unexpected reduction in the rate of inflation?

• A) creditors.
• B) a borrower whose loan has a fixed nominal interest rate.
• C) debtors.
• D) workers who are covered by a COLA agreement.

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Definitions:

Knurling

A manufacturing process applied to create a patterned texture on the surface of a metal part, typically for added grip and aesthetic appeal.

Flat Taper

A gradual reduction in thickness or diameter across a flat surface or material.

Shims

Thin pieces of material used to fill small gaps or spaces between objects for proper fit, alignment, or support.

Dowels

Cylindrical rods, typically made of wood, metal, or plastic, used to reinforce joints or support shelves and other components in furniture.