In which of the following situations would a lender definitely pay a borrower interest in return for borrowing the lender's money?
A) if the real interest rate was negative
B) if the real interest rate was positive
C) if the nominal interest rate was negative
D) if the nominal interest rate was positive

Question

Quizplus · Accepted Answer

A lender would pay a borrower interest if the nominal interest rate is negative, as it implies the lender is effectively paying the borrower to take the money.

In Which of the Following Situations Would a Lender Definitely