Question

comparing the situation of a nominal rate of 10 percent and an inflation rate of 9 percent with a nominal interest rate of 6 percent and inflation rate of 2 percent, consumers would borrow more in which situation?

a) nominal interest rate of 10 percent since real interest rate is 1 percent

b) nominal interest rate of 6 percent since the real interest rate is 2 percent

c) nominal interest rate of 6 percent since the real interest rate is 4 percent

d) nominal interest rate of 10 percent since the real interest rate is 9 percent