If Inflation Turns Out to Be Lower Than Expected ​

question 13

Multiple Choice

If inflation turns out to be lower than expected ​

• A)savers benefit.
• B)borrowers benefit while savers are not affected.
• C)savers and borrowers are equally affected.
• D)savers are adversely affected but borrowers benefit.

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Definitions:

Risk Averse

The tendency of individuals to prefer certainty over uncertainty, avoiding risks where possible, especially in financial decisions.

Dividend

A portion of a company's earnings distributed to its shareholders.

Interest Rate

The percentage at which interest is paid by a borrower for the use of money that they borrow from a lender or the rate earned on a deposit or investment.

Present Value

The present value of a future amount of money or series of cash flow using a given rate of return.