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Suppose you borrow $1,000 of principal that must be repaid at the end of two years, along with interest of 5 percent a year. If...Asked by Billy
Suppose you borrow $100 of principal that must be repaid at the end of two years, along with interest of 4 percent per year. If the annual inflation rate turns out to be 8 percent,
(a) What is the real rate of interest on the loan?
(b) What is the real value of the principal repayment?
(a) What is the real rate of interest on the loan?
(b) What is the real value of the principal repayment?