When Inflation Rises Unexpectedly

question 50

Multiple Choice

When inflation rises unexpectedly:

• A) the real interest rate will exceed the equilibrium rate,which will benefit lenders and harm borrowers.
• B) the real interest rate will exceed the equilibrium rate,which will benefit borrowers and harm lenders.
• C) the real interest rate will fall short of the equilibrium rate,which will benefit lenders and harm borrowers.
• D) the real interest rate will fall short of the equilibrium rate,which will benefit borrowers and harm lenders.