Question

5) Borrowers benefit and lenders lose when the A) actual interest rate is less than the...

5) Borrowers benefit and lenders lose when the

A) actual interest rate is less than the expected real interest rate.

B) actual interest rate is greater than the expected real interest rate.

C) actual interest rate is equal to the expected real interest rate.

D) actual inflation rate is less than the expected inflation rate.

is it (a) by chance

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Answer #1

Borrowers get benefit and lenders get to lose when the actual interest rate is greater than that of expected really interested in this is because in the expected real interest rate in mind lenders got to fix an interest rate and according to that the payments actually happened but to when he realises that the actual interest rate is higher that means he could have got more return and in this case the borrower is benefited and he is the one who lost.

Therefore (B) is the answer to this question

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