If inflation is correctly anticipated,in a transaction between borrowers and lenders,inflation
A) will not reduce purchasing power of the money paid back
B) will redistribute purchasing power from borrowers to lenders
C) will not redistribute purchasing power
D) will redistribute purchasing power from to lenders to borrowers
E) cannot be taken into consideration when a loan is negotiated

Question

Quizplus · Accepted Answer

If inflation is correctly anticipated, both borrowers and lenders can adjust the nominal interest rate to account for expected inflation, ensuring that the real purchasing power is maintained and not redistributed.

If Inflation Is Correctly Anticipated,in a Transaction Between Borrowers and Lenders,inflation