Why Are Creditors Harmed by Unexpected Inflation

question 8

Multiple Choice

Why are creditors harmed by unexpected inflation?

• A)​Creditors receive lower nominal rates of interest when prices rise.
• B)​Creditors are paid back with more valuable dollars.
• C)​Creditors receive higher nominal rates of interest when prices rise.
• D)​Creditors are paid back money with less spending power than they expected when the money was loaned out.

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Definitions:

Sternum

A long, flat bone located in the center of the chest, serving as a support for the rib cage and to protect vital organs such as the heart and lungs.

Sternal Angle

A thoracic landmark formed at the junction between the manubrium and the body of the sternum, significant in identifying rib levels.

Ribs

Bones that form the rib cage, designed to protect thoracic organs, such as the heart and lungs, and support the upper body.

Sternum

The long flat bone located in the center of the chest, which connects to the ribcage and protects the heart and lungs.