Ask Question
23 November, 06:46

Assume that Zac gets a fixed-rate loan from a bank when the expected inflation rate is 4 percent. If the actual inflation rate turns out to be 2 percent, who benefits from this: Zac, the bank, neither, or both? Explain.

+2
Answers (1)
  1. 23 November, 07:23
    0
    The bank

    Explanation:

    The bank benefits because when setting up the loan, the determined rate accounted for a 4% reduction in purchasing power, while the actual reduction in purchasing power was 2%. Therefore, Zac will be paying back "money that is worth more" and the bank benefits.
Know the Answer?
Not Sure About the Answer?
Get an answer to your question ✅ “Assume that Zac gets a fixed-rate loan from a bank when the expected inflation rate is 4 percent. If the actual inflation rate turns out to ...” in 📙 Business if there is no answer or all answers are wrong, use a search bar and try to find the answer among similar questions.
Search for Other Answers