Assume That There Is a Fixed Rate of Interest on Contracts

question 188

Multiple Choice

Assume that there is a fixed rate of interest on contracts for borrowers and lenders.If unanticipated inflation occurs in the economy, then

• A)both lenders and borrowers benefit.
• B)both lenders and borrowers are hurt.
• C)borrowers are hurt, but lenders benefit.
• D)lenders are hurt, but borrowers benefit.

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Definitions:

Negotiable Instrument

A document guaranteeing the payment of a specific amount of money, either on demand or at a set time, with the payer and payee usually named.

Proper Use

The appropriate, intended, or correct manner of utilizing something according to guidelines, laws, or specifications.

Chattel Mortgage

A loan arrangement where personal movable property is used as security for the loan.

Promissory Note

An economic document that includes a binding commitment from one party to another to deliver a specific amount of funds, payable either upon request or at an agreed-upon date in the future.