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Basic Question 6 of 6
Suppose that a bank expects inflation to be 2% and charges borrowers an interest rate of 4% accordingly. Now suppose that inflation is actually 5%. In this case, inflation redistributes income from the ______.
B. bank's borrowers to the bank
C. bank to the bank's creditors
A. bank to the bank's borrowers
B. bank's borrowers to the bank
C. bank to the bank's creditors
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Learning Outcome Statements
describe the roles and objectives of central banks
CFA® 2025 Level I Curriculum, Volume 1, Module 4.