The Threat of Future Inflation

question 273

Multiple Choice

The threat of future inflation:

• A) makes people reluctant to lend money for long periods.
• B) makes people eager to lend money for long periods.
• C) has no effect on lending money.
• D) increases the value of money paid back in the future.

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Definitions:

Secured Parties

Creditors who have the right to seize collateral if a debtor fails to fulfill their obligation under a secured agreement.

Unsecured Creditors

Creditors who have extended credit without the protection of collateral, making their claims on a debtor’s assets secondary to those of secured creditors.

Collateral

Property or assets pledged by a borrower to secure a loan or other credit, and subject to seizure on default.

Security Interest

A legal claim or lien on collateral that has been pledged, usually to secure repayment of a debt.