Comparing the situation of a nominal interest rate of 10 percent and a

Comparing the situation of a nominal interest 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 4 percent.
C) Nominal interest rate of 10 percent since the real interest rate is 9 percent.
D) Nominal interest rate of 6 percent since the real interest rate is 2 percent.

ANSWER

A