If people are willing to lend at 7% when inflation is 2% and continue to lend the sameamounts when inflation is 4% and interest rates have risen to 8%, they are assumed to be subject to:

If people are willing to lend at 7% when inflation is 2% and continue

1.	If people are willing to lend at 7% when inflation is 2% and continue to lend the sameamounts when inflation is 4% and interest rates have risen to 8%, they are assumed to be subject to:
A.	Extrapolative expectations
B.	Risk aversion
C.	Asymmetric information
D.	Money illusion
Answer» E.