The data below show the nominal interest rate and the inflation rate for several developed economies as reported in The Economist in February 2018.

a. Compute the real interest rate for each country, assuming that people expected the inflation rate at the time to persist.

b. If you were a lender, in which country would you have wanted to lend in February 2018? Explain.

c. If you were a borrower, in which country would you have wanted to borrow in February 2018? Explain.

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Country Nominal Inflation Rate Real Interest Rate (% change in Interest (on 10-year CPI from Rate government bonds) previous year) Australia 2.82 1.9 Canada 2.36 1.9 Euro area 0.70 1.3 Japan 0.07 1.1 11 Switzerland 0.15 0.8 - U.K. 1.59 3.0 U.S.A. 2.79 2.1