If the Expected Inflation Rate Is 4 Percent, the Nominal

question 31

Multiple Choice

If the expected inflation rate is 4 percent, the nominal interest rate is 6 percent, and the actual inflation rate turns out to be 2 percent, then the realized real interest rate is _____than the expected real interest rate and borrowers______relative to lenders.

• A)less; gain
• B)less; lose
• C)greater; gain
• D)greater; lose

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Definitions:

Response Rates

The percentage of people who reply to a survey or query out of the total number of people who were asked.

Archival Research

A research method that involves the acquisition and analysis (or reanalysis) of existing information collected by others.

High Cost

Refers to situations where the expense, either emotional, financial, or time-related, is considered to be significant or excessive.

Causal Hypothesis

A statement predicting a cause-and-effect relationship between two or more variables.