Is the real interest rate on loan higher-lower than expected, Microeconomics

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Is the real interest rate on loan higher-lower than expected

Suppose that a borrower and a lender agree on the nominal interest rate to be paid on a loan. Then inflation turns out to be higher than they both expected.

a. Is the real interest rate on this loan higher or lower than expected?

b. Does the lender gain or lose from this unexpectedly high inflation? Does the borrower gain or lose?

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Microeconomics: Is the real interest rate on loan higher-lower than expected

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Request for Solution File

Ask an Expert for Answer!!

Microeconomics: Is the real interest rate on loan higher-lower than expected

Reference No:- TGS047143

Have a Question? (oR Write a Review)

Recent Questions Asked Microeconomics

Q : Explain likely effects of the policy on real gdp

Q : Estimated value of the adr per share

Q : Office supplies expense for the year

Q : What was the character of the gain

Q : Is the real interest rate on loan higher-lower than expected

Q : Deposit expansion multiplier

Q : What was the amount of abc inc.''s earning and profits

Q : Actual flow of goods for most businesses problem

Q : Main disadvantage of discounted payback

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Request for Solution File

Ask an Expert for Answer!!

Microeconomics: Is the real interest rate on loan higher-lower than expected

Reference No:- TGS047143

Recent Questions Asked Microeconomics

Q : Explain likely effects of the policy on real gdp

Q : Estimated value of the adr per share

Q : Office supplies expense for the year

Q : What was the character of the gain

Q : Is the real interest rate on loan higher-lower than expected

Q : Deposit expansion multiplier

Q : What was the amount of abc inc.''s earning and profits

Q : Actual flow of goods for most businesses problem

Q : Main disadvantage of discounted payback

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