If inflation is higher than what was expected, Select one: a. debtors receive a higher real interest rate than they had anticipated. b. creditors receive a lower real interest rate than they had anticipated. c. debtors pay a higher real interest rate than they had anticipated. d. creditors pay a lower real interest rate than they had anticipated.

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Business

Bentley

27 October, 00:23

If inflation is higher than what was expected, Select one: a. debtors receive a higher real interest rate than they had anticipated. b. creditors receive a lower real interest rate than they had anticipated. c. debtors pay a higher real interest rate than they had anticipated. d. creditors pay a lower real interest rate than they had anticipated.

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Answers (1)

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Lauryn Steele · Answer 1

The correct option is B

Explanation:

Inflation is the measure which is quantitative in nature as the rate at which the average level of price of the selected goods and services in the economy rises over the year or time period.

It is stated or expressed in terms of percentage, because it indicates or explains the decrease or fall in the purchasing power of currency of the nation.

So, if the inflation is higher than what is expected, then the creditors who invested their money, will receive lower rate of interest then they anticipated as their is decrease of fall in the currency of the nation.