Sarah knows that the CPI in 2021 is equal to 100 and she expects the CPI in 2022 to be equal to 120. Sarah has negotiated a one year personal loan from the Commonwealth Bank in 2021 where she will pay a nominal interest rate of 23%. If the actual CPI for 2022 is lower than the expected CPI for 2022, then Sarah will be:

Select one:

a.

better off than she anticipated

b.

she is neither better or worse off.

c.

worse off than she anticipated

d.

convinced that the Fisher equation is not correct

e.

paying a different, and lower real interest rate than she anticipated