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If a bank offers a home loan with a fixed interest rate of 8 percent with an expected inflation rate of 4 percent. If the
If a bank offers a home loan with a fixed interest rate of 8 percent with an expected inflation rate of 4 percent. If the inflation rate ends up being 5 percent, which accurately describes the impact on the bank?
- It benefited because the real interest rate increased by 1 percent.
- b. It benefited because the real interest rate increased by 4 percent.
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c. It lost financially because the real rate of interest decreased by 1 percent.
- d. Its expected gains increased because the real rate of interest increased to 9 percent.
- e. The bank's real interest rate was not impacted by the difference in the inflation rate.
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