Advanced Placement (AP), 20.03.2020 01:38 castroarlety
If the interest rate on loans before adjusting for inflation is 9%, and the expected inflation rate is 4%, then which of the following must be true?
A. Lenders are expected to receive an additional 4% on their loaned funds.
B. Borrowers are expected to pay an additional 4% on their borrowed funds.
C. The expected real interest rate is 9%.
D. The expected real interest rate is 13%.
E. The nominal interest rate is 9%.
Answers: 2
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If the interest rate on loans before adjusting for inflation is 9%, and the expected inflation rate...
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