If the value of your debt decreases over time:
A) the real interest rate is negative.
B) inflation is zero.
C) the real interest rate is positive.
D) the real interest rate is zero.

Question

Quizplus · Accepted Answer

If the value of debt decreases over time, it means that the inflation rate is higher than the interest rate on the debt. In other words, the borrower is paying back less in real terms than they borrowed. This indicates that the real interest rate is negative.

If the Value of Your Debt Decreases Over Time