Final answer:
In accordance with the economic principle of Time Preference, creditors are awarded interest rates as an incentive for lending and deferring present consumption for future gains. These rates are influenced by various factors, including inflation, which affects the real value of the loan repayments.
Step-by-step explanation:
The economic principle of Time Preference suggests that people value future consumption and less present consumption (more savings) because the opportunity cost of present consumption, in terms of what is given up in the future, has increased. As compensation for deferring consumption, creditors are typically awarded interest rates, which act as an incentive for saving and are influenced by several factors, including inflation. When the question asks what is awarded to creditors in accordance with the economic principle of Time Preference, the answer is C. Interest Rates.
Additionally, in scenarios where interest rates are fixed, a rise in the rate of inflation usually penalizes creditors since they receive repayment in currency that has decreased in value due to inflation, whereas debtors benefit because they repay their loans in lesser-valued dollars. Understanding the interplay between interest rates and inflation is crucial for both creditors and debtors to make informed financial decisions.