MCQOPTIONS
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| 1. |
The nominal interest rate is defined as the amount paid the borrower to the lender for using the borrowed amount for a specific period. Real interest rate calculated based on actual value (inflation-adjusted), is approximately equal to the difference between the nominal rate and expected rate of inflation in the economy.Which of the following assertions is best supported by the above information? |
| A. | Under high inflation, the real interest rate is low and borrowers get benefited |
| B. | Under low inflation, the real interest rate is high and borrowers get benefited |
| C. | Under high inflation, the real interest rate is low and lenders get benefited |
| D. | Under low inflation, the real interest rate is low and borrowers get benefited |
| Answer» B. Under low inflation, the real interest rate is high and borrowers get benefited | |