If people are willing to lend at 7% when inflation is 2% and continue to lend the same amounts when inflation is 4% and interest rates have risen to 8%, they are assumed to be subject to:

Related MCQs

• If the public debt can be financed without adding to inflation or causing interest rates to rise, it is said to be:
• When the lender and the borrower have different amounts of information regarding a transaction,__________
• Using a supply and demand framework, what is likely to happen to share prices in general if the central bank unexpectedly raises interest rates?
• Using a supply and demand framework, what is likely to happen to share prices in general if the central bank raises interest rates in response to a fall in the exchange rate?
• If interest rates rise, the present value of any future earnings is bound to:
• The ability of central banks to influence short-term interest rates rests upon:
• The authority which intervenes directly or indirectly in foreign exchange markets by Altering the interest rates is considered as
• In a situation where share prices are generally depressed because long-term interest rates are expected to rise in future, a large firm looking for long-term finance would normally consider:
• For given change in interest rates, percentage change in present value of bond is classified as
• According to --------- theory of interest, the rate of Interest is the price of credit which is determined by the demand and supply for loanable funds.