B) Only the lenders benefit.

Exploring Economics
8th Edition
ISBN:9781544336329
Author:Robert L. Sexton
Publisher:Robert L. Sexton
Chapter18: Introduction To Macroeconomics: Unemployment, Inflation, And Economic Fluctuations
Section: Chapter Questions
Problem 13P
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Consider borrowers and lenders who agree to loans with fixed nominal interest rate-
If inflation is lower than what the borrowers and lenders expected, then who
benefits from higher real interest rates?
A) Only the borrowers benefit.
B) Only the lenders benefit.
OC) Both borrowers and lenders benefit.
D) Neither borrowers nor lenders benefit.
Transcribed Image Text:Consider borrowers and lenders who agree to loans with fixed nominal interest rate- If inflation is lower than what the borrowers and lenders expected, then who benefits from higher real interest rates? A) Only the borrowers benefit. B) Only the lenders benefit. OC) Both borrowers and lenders benefit. D) Neither borrowers nor lenders benefit.
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