Final answer:
An adjustable-rate mortgage (ARM) is a type of loan that has an interest rate that fluctuates based on economic factors. With an ARM, the interest rate varies with the rate of inflation.
Step-by-step explanation:
An adjustable-rate mortgage (ARM) is a type of loan that has an interest rate that fluctuates based on economic factors. With an ARM, the interest rate varies with the rate of inflation. This means that if inflation rises, the interest rate on the loan will also rise, and if inflation falls, the interest rate will also fall.
For example, let's say a borrower has an adjustable-rate mortgage with an initial interest rate of 3%. If inflation falls unexpectedly by 3%, it is likely that the interest rate on the mortgage will also decrease, providing the borrower with a lower interest rate.
Therefore, the correct answer to the question is B) Variable-rate loan.