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Business, 04.01.2021 19:20 flyingcerberus1408

Suppose Sally borrows $1,000 from Harry for one year and agrees to pay a nominal interest rate of 10%. When she borrows the money, both she and Harry expect an inflation rate of 5%. The expected real interest rate on the loan is %.Suppose that when Sally pays back the loan after one year, the actual inflation rate turns out to be 2%. The actual real interest rate on the loan is %.a. If the inflation rate turned out to be higher than expected, then:. b. But if inflation turned out to be lower than expected, then:.

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Suppose Sally borrows $1,000 from Harry for one year and agrees to pay a nominal interest rate of 10...
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