If Inflation Increases Unexpectedly, Then

question 252

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.
• E)borrowers gain from a higher than expected real interest rate.

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Definitions:

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