Kyle wants to borrow $500 from Stan. Stan wants to make 8% real return on his money, so they both ag

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Kyle wants to borrow $500 from Stan. Stan wants to make 8% real return on his money, so they both ag

Kyle wants to borrow $500 from Stan. Stan wants to make 8% real return on his money, so they both agree on an 8% interest rate paid next year. Both don't anticipate the -3% inflation next year. In this case:
A) Stan is better off.
B) Kyle will pay an 11% nominal interest rate.
C) Kyle will pay an 8% real interest rate.
D) all of the above

Textbook

Principles of Macroeconomics

Edition: 11^th

Authors: Case, Fair, Oster

Read 173 times

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8 years ago

Perfect answer, thank you

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