If Inflation Increases Unexpectedly,then

question 59

Multiple Choice

If inflation increases unexpectedly,then

• A)borrowers pay a higher real interest rate than they expected.
• B)lenders receive a lower real interest rate than they expected.
• C)lenders gain and borrowers gain.
• D)neither borrowers nor lenders lose.

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Definitions:

Calendar Year-End

The end of the annual accounting period that coincides with the end of the calendar year, typically December 31.

Post-Closing Trial Balance

A financial statement listing all the accounts and their balances after closing entries are made, ensuring the accounts are ready for the next accounting period.

Adjusted Trial Balance

A report that lists all accounts and their balances after adjusting entries are made, ensuring that debits equal credits.

Closing Entries

The journal entries made at the end of an accounting period to transfer the balances of temporary accounts to permanent accounts.