If inflation turns out to be higher than was anticipated, debtors are helped because
A) the real present value of their payments increases.
B) the real present value of their payments decreases.
C) the nominal present value of their payments increases.
D) the nominal present value of their payments decreases.
Question 2
Four banks are offering the same interest rate of 4. Where do you invest?
A) Bank A compounds interest on a yearly basis.
B) Bank B compounds interest on a monthly basis.
C) Bank C compounds interest on a daily basis.
D) I am indifferent between banks.
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