If the interest rate paid by borrowers and the interest rate received by savers accurately reflect the realized rate of inflation,
A) borrowers gain and savers lose.
B) savers gain and borrowers lose.
C) both borrowers and savers lose.
D) neither borrowers nor savers gain nor lose.
E) both borrowers and savers gain.

Question

Quizplus · Accepted Answer

If the interest rates accurately reflect the realized rate of inflation, it means that the real value of the money borrowed and saved remains constant over time. Therefore, neither borrowers nor savers gain nor lose in terms of the real purchasing power of their money.

If the Interest Rate Paid by Borrowers and the Interest