If borrowers and lenders anticipate that the rate of inflation will be 5%, but instead it turns out to be 3%, which of the following is likely to occur? Select one: a. The real interest rate is higher than expected. b. Lenders wish that they had made fewer loans. c. Borrowers wish that they had borrowed more money. d. Insufficient loans will have been made by lenders to maintain profit levels.
If borrowers and lenders anticipate that the rate of inflation will be 5%, but instead it turns out to be 3%, which of the following is likely to occur? Select one: a. The real interest rate is higher than expected. b. Lenders wish that they had made fewer loans. c. Borrowers wish that they had borrowed more money. d. Insufficient loans will have been made by lenders to maintain profit levels.
Chapter18: Introduction To Macroeconomics: Unemployment, Inflation, And Economic Fluctuations
Section: Chapter Questions
Problem 11P
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If borrowers and lenders anticipate that the rate of inflation will be 5%, but instead it turns out to be 3%, which of the following is likely to occur?
Select one:
a. The real interest rate is higher than expected.
b. Lenders wish that they had made fewer loans.
c. Borrowers wish that they had borrowed more money.
d. Insufficient loans will have been made by lenders to maintain profit levels.
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