If,in a Given Period,the Rate of Inflation Turns Out to Be

question 86

Multiple Choice

If,in a given period,the rate of inflation turns out to be lower than lenders and borrowers anticipated,the effect is that

• A) the real payments by the borrowers will be lower than expected.
• B) the nominal income of lenders will be higher than expected,but their real income will be lower than expected.
• C) the nominal income of the lenders will be as expected,but their real income will be higher than expected.
• D) both the nominal and real income of lenders will be higher than expected.
• E) the real income of lenders will be higher than expected,but their nominal income will be lower than expected.

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Definitions:

Break-even Volume

The quantity of sales needed for a product to generate revenue that matches the total costs, resulting in no profit or loss.

Variable Costs

Expenses that change in proportion to the activity of a business, such as costs for raw materials or production labor.

Fixed Costs

Costs that remain constant regardless of the amount of goods produced or sold, like lease payments or employee wages.

Net Income

The amount of profit left after all operating expenses, taxes, and costs have been subtracted from total revenue.