Question

O Cucome my price cente proportionat cater than the inten nominal income Yes, because real income may fall if price increases are proportionally less than the increases in nominal income 4 Question 30 (1 point) A lender need not be penalized by inflation if the: 3: 6 lender correctly anticipates inflation and increases the nominal interest rate accordingly ulong-term rate of inflation is less than the short-term rate of inflation 4: inflation is unanticipated by both borrower and lender 8 long-term rate of inflation is the same as the short-term rate of inflation short-term rate of inflation is less than the long-term rate of inflation ge 5: Previous Page Next Page Page 15 of 20 10 Submit Quiz 29 of 40 questions saved hp 19 49 12 15 17 DE $ 9 0 5 5 6 3 7 Y U E R T G F H к S D M C B V Z

Answer 1

ANSWER-

Inflation is a the increase in price of good and services over a period of time. It decreases the purchasing power.

Nominal interest rate is the interest rate at which lender lends the money to the borrower this interest rate does take into account inflation.

So, A lender need not to be penalized by the inflation if the-

Lender correctly anticipates inflation and increase the nominal interest rate accordingly as when money is lend it's value will be decreased because of inflation and the purchasing power of the lender will be decreased so in order to not decrease the value of money the lender can increase the nominal interest rate by correctly anticipating the inflation.

Hence, the answer is 1st option - Lender correctly anticipates inflation and increase the nominal interest rate accordingly.