Question 11EconomicsJAMB

If inflation is anticipated to continue

A

People will lose confidence in goods

B

Lenders will demand higher interest rates

C

The growth of full-employment output will be accelerated

D

People will want to hold more money.

Step-by-Step Explanation

Anticipated inflation leads lenders to seek higher interest rates to compensate for the decrease in purchasing power over time. This adjustment protects their returns, ensuring that the money repaid in the future retains its value relative to current prices. Consequently, higher interest rates can also influence borrowing and spending behaviors in the economy.

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