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

[ashley]

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.

[epscape]

Answer to Question 1

B

Answer to Question 2

A

[ashley]

TYSM

[DylanD1323]

Excellent