Question

In which of the following situations would you prefer to be the​ lender? A. The interest rate is 4 percent and the expected inflation rate is 1 percent. B. The interest rate is 25 percent and the expected inflation rate is 50 percent. C. The interest rate is 13 percent and the expected inflation rate is 15 percent. D. The interest rate is 9 percent and the expected inflation rate is 7 percent.

Answer 1

Answer:

A. The interest rate is 4 percent and the expected inflation rate is 1 percent.

Explanation:

A. The interest rate is 4 percent and the expected inflation rate is 1 percent

Inflation refers to the rate at which prices for goods and services rise. In the United States, the interest rate, or the amount charged by lender to a borrower, is based on the federal funds rate that is determined by the Federal Reserve (sometimes called "the Fed").

B. The interest rate is 25 percent and the expected inflation rate is 50 percent.  the lender loses money

C. The interest rate is 13 percent and the expected inflation rate is 15 percent the lender loses money