The threat of future inflation:
A) makes people reluctant to lend money for long periods.
B) makes people eager to lend money for long periods.
C) has no effect on lending money.
D) increases the value of money paid back in the future.

Question

Quizplus · Accepted Answer

The threat of future inflation makes people reluctant to lend money for long periods because they fear that the money they lend will be worth less in the future due to inflation. This results in higher interest rates for long-term loans to compensate for the inflation risk.

The Threat of Future Inflation