Author Question: Suppose you lend 1,000 at an interest rate of 10 percent over the next year. If the expected real ... (Read 116 times)

ashley · **on:** Jun 29, 2018

Suppose you lend 1,000 at an interest rate of 10 percent over the next year.

If the expected real interest rate at the beginning of the loan contract is 4 percent, then what rate of inflation over the upcoming year would be most beneficial to you as the lender? An inflation rate
A) equal to 4 percent. B) equal to 0 percent.
C) equal to 6 percent. D) greater than 6 percent.

Question 2

Refer to Figure 18-1. The appreciation of the dollar is represented as a movement from

A) D to C. B) C to B. C) B to A. D) C to A.