The “prime” interest rate is the rate that banks charge their best customers. Based on the nominal interest rates and inflation rates in Table 19.10, in which of the years would it have been best to be a lender? Based on the nominal interest rates and inflation rates in Table 19.10, in which of the years given would it have been best to be a borrower?

Table 19.10

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Year Prime Interest Rate 1970 7.9% 1974 1978 9.1% 1981 10.8% 18.9% Inflation Rate 5.7% 11.0% 7.6% 10.3%