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Title: Suppose a bank makes a $1,000 loan to you at 5 percent interest when the expected and actual ... Post by: Science220 on Oct 1, 2023 Suppose a bank makes a $1,000 loan to you at 5 percent interest when the expected and actual inflation rate are zero percent. Before you pay back the $1,000 principal and $50 interest, the inflation rate increases to 10 percent. Does anyone lose from this situation? ▸ Nobody loses, because the terms were set before the inflation rate increased, and once the terms are set, inflation does not affect the situation. ▸ You lose, because the dollars that you have borrowed are worth more the higher the inflation rate. ▸ The banker loses, because you will be paying back the loan with dollars that are worth less than the dollars you borrowed. ▸ Both the banker and you lose, for the reasons in answers b and c. ▸ There is not enough information to answer the question. Title: Re: Suppose a bank makes a $1,000 loan to you at 5 percent interest when the expected and actual ... Post by: roman91 on Oct 1, 2023 Content hidden
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