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:

Controlled Processing

The mental activity that requires deliberate, conscious attention and effort, as opposed to automatic processes that require minimal awareness.

Social Loafing

The tendency of individuals to exert less effort on a task when working in a group compared to when working alone.

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Acts or offerings that aid in advancing a cause or improving a situation, often involving time, money, or effort towards a collective goal.

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Something or someone that has been recognized and named as being a particular person or thing.