Given a Fixed Nominal Interest Rate on a Loan, Unanticipated

question 107

Multiple Choice

Given a fixed nominal interest rate on a loan, unanticipated deflation:

• A)​decreases the burden of paying off the loan.
• B)​increases the burden of paying off the loan.
• C)​does not alter the burden of paying off the loan.
• D)has an indeterminate effect on the burden of paying off the loan.

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Definitions:

Condenses

The process by which a substance changes from a gaseous state to a liquid state.

Low-pressure Cells

Areas in the Earth's atmosphere where the air pressure is lower than that of the surrounding regions, often associated with wet weather conditions.

Predominant Natural Vegetation

The most common type of wild plants growing in a particular region without human intervention.

Climate

The average weather conditions of a region over a long period, typically including temperature, precipitation, humidity, and seasons.