A Lender Need Not Be Penalized by Inflation If the

question 96

Multiple Choice

A lender need not be penalized by inflation if the

• A)long-term rate of inflation is less than the short-term rate of inflation.
• B)short-term rate of inflation is less than the long-term rate of inflation.
• C)lender correctly anticipates inflation and increases the nominal interest rate accordingly.
• D)inflation is unanticipated by both borrower and lender.

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Definitions:

Standard Error

The statistical metric that represents the dispersion within a sample's distribution, often applied to the average.

Population Proportion

The share or fraction of a population that exhibits a particular attribute or characteristic.

Population Proportion

The ratio of members in a group that have a characteristic of interest to the total number of individuals in the population.

Sample Proportion

The fraction or percentage of the sample that has a particular property or characteristic.