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During the Last Tax Year You Lent Money at a Nominal

Question 77

Multiple Choice

During the last tax year you lent money at a nominal rate of 6 percent.Actual inflation was 1.5 percent,but people had been expecting 1 percent .This difference between actual and expected inflation


A) transferred wealth from the borrower to you and caused your after-tax real interest rate to be 0.5 percentage points higher than what you had expected.
B) transferred wealth from the borrower to you and caused your after-tax real interest rate to be more than 0.5 percentage points higher than what you had expected.
C) transferred wealth from you to the borrower and caused your after-tax real interest rate to be 0.5 percentage points lower than what you had expected.
D) transferred wealth from you to the borrower and caused your after-tax real interest rate to be more than 0.5 percentage points lower than what you had expected.

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