If real interest rates are negative, this is good for

Economics Nov 25, 2020

If real interest rates are negative, this is good for... a. Lenders. b. Nobody c. Borrowers. d. Savers.

Expert Solution

The correct option is C as if the real interest rate is negative it means that the inflation is greater than the nominal interest rate and if the federal funds rate is 2% and the inflation rate is 10% then the borrower will 7.27% of every dollar borrowed per year.

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