If both the interest rate paid by borrowers and the interest rate received by savers accurately reflect the realized rate of inflation:

Question

Quizplus · Accepted Answer

If the interest rates accurately reflect the realized rate of inflation, then neither borrowers nor savers gain or lose. This is because the real interest rate (nominal interest rate - inflation rate) would be zero, meaning that the return on investment for savers would be equal to the cost of borrowing for borrowers. So, there would be no advantage or disadvantage for either group.

If Both the Interest Rate Paid by Borrowers and the Interest