A Lender May Be Hurt by Inflation in All of the Following

question 68

Multiple Choice

A lender may be hurt by inflation in all of the following situations except one.Which is the exception?

• A)If the term of the loan is more than one year.
• B)If the lender correctly anticipates inflation and increases the nominal interest rate accordingly.
• C)If the rate of inflation is greater than anticipated by both borrower and lender.
• D)If the rate of inflation is greater than the nominal interest rate.

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Definitions:

Proactive Interference

The phenomenon where older memories interfere with the recall of newer memories.

Retention

The ability to keep or hold onto something, such as information or substances, within a system or body.

Long-Term Memory Formation

The process of transferring information from short-term to long-term memory, involving consolidation and the strengthening of neural connections.

Structural Changes

Alterations in the physical or organizational structure of something, often referring to the brain or other bodily organs.