In an inflationary period, interest rates have a tendency to:
A) rise
B) fall
C) stay the same
D) act erratically

Name: In an inflationary period, interest rates have a tendency to: A) rise B) fall C) stay the same D) act erratically
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Question

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During an inflationary period, interest rates have a tendency to rise because as inflation increases, the purchasing power of money decreases. Therefore, lenders demand higher interest rates to compensate for the decrease in the value of the money they are lending.

In an Inflationary Period, Interest Rates Have a Tendency To