If You Borrow Money at What You Believe Is an Appropriate

question 126

Multiple Choice

If you borrow money at what you believe is an appropriate interest rate for the level of expected inflation,but the actual inflation rate turns out to be much higher than you had expected,you will

• A) be paying the loan back with dollars that have much less purchasing power than you had expected.
• B) be paying the loan back with dollars that have much higher purchasing power than you had expected.
• C) be paying the loan back with dollars that have the same purchasing power as the dollars you borrowed.
• D) lose from an intended redistribution of wealth.
• E) unintentionally redistribute wealth to the lender.

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Definitions:

Predicting Miserable

The act of forecasting or expecting a state of extreme unhappiness or discomfort.

Approach-Approach Conflict

A psychological conflict that occurs when an individual must choose between two desirable outcomes or goals.

Approach-Avoidance Conflict

A psychological conflict that occurs when a goal or situation has both positive and negative aspects that make the goal appealing yet repelling at the same time.

Multiple Approach-Avoidance Conflict

A psychological conflict that occurs when a person is faced with a decision that has both attractive and unattractive elements.