Suppose Joe lends Maxine $ 750 for the year. At the end of the year, Maxine repays Joe the $ 750 plus an additional payment of $112.50 for the use of Joe's money during the year.

Maxine, when borrowing the funds from the Joe, anticipates the inflation rate for the year will be 10%, while Joe expects it to be 7 %. Inflation is actually 8% for the year. Which of the following statements is true

Select one:

a.The nominal interest rate for this loan is 7%

b.Joe benefits unexpected from this higher than expected inflation rate.

c.The real interest rate for this loan is 7%

d.Maxine benefits unexpectedly from this lower tha expected inflation rate.