If the interest rate on loans before adjusting for inflation is 9%, and the expected inflation rate is 4%, then which of the following must be true?
A
Lenders are expected to receive an additional 4% on their loaned funds.
B
Borrowers are expected to pay an additional 4% on their borrowed funds.
C
The expected real interest rate is 9%
D
The expected real interest rate is 13%.
E
The nominal interest rate is 9%.
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