Top Posters
Since Sunday
7
6
o
5
b
4
s
3
j
3
b
3
m
3
K
3
g
3
L
3
w
3
Home Q & A Board Other Fields Homework Help Business Economics
New Topic  
Science220 Science220
wrote...
Go to Answer
Posts: 131
Rep: 0 0
9 months ago

Suppose a bank makes a $1,000 loan to you at 5 percent interest when the expected and actual inflation rate are zero percent. Before you pay back the $1,000 principal and $50 interest, the inflation rate increases to 10 percent. Does anyone lose from this situation?



▸

Nobody loses, because the terms were set before the inflation rate increased, and once the terms are set, inflation does not affect the situation.



▸

You lose, because the dollars that you have borrowed are worth more the higher the inflation rate.



▸

The banker loses, because you will be paying back the loan with dollars that are worth less than the dollars you borrowed.



▸

Both the banker and you lose, for the reasons in answers b and c.



▸

There is not enough information to answer the question.

Textbook 
Economics

Economics


Edition: 12th
Author:
Read 37 times
1 Reply
Replies
Answer verified by a subject expert
roman91roman91
wrote...
#1
Posts: 135
Rep: 0 0
9 months ago
Sign in or Sign up in seconds to unlock everything for free
More solutions for this book are available here
1

Related Topics

Science220 Author
wrote...

9 months ago
this is exactly what I needed
momochiime
wrote...

Yesterday
Thank you, thank you, thank you!
branbran2k16
wrote...

2 hours ago
Correct Slight Smile TY
New Topic      
Quick Reply
Explore
Post your homework questions and get free online help from our incredible volunteers
  1016 People Browsing
Start New Topic Take the Tour CoursesNew Study Tools Topics Trending Browse by Textbook
Related Images
  
 200
  
 362
  
 315
Your Opinion
What's your favorite funny biology word?
Votes: 336
Previous poll results: Which 'study break' activity do you find most distracting?