If borrowers and lenders agree on a nominal interest rate and inflation turns out to be less than they had expected ?

A. neither borrowers nor lenders will gain because the nominal interest rate has been fixed by contract
B. None of these answers
C. borrowers will gain at the expense of lenders
D. lenders will gain at the expense of borrowers

Correct Answer: lenders will gain at the expense of borrowers ✔

Last Updated: June 11, 2019