A mortgage loan is a loan that a person makes to purchase a house. Table 19.11 provides a list of the mortgage interest rate for several different years and the rate of inflation for each of those years. In which years would it have been better to be a person borrowing money from a bank to buy a home? In which years would it have been better to be a bank lending money?

Table 19.11

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Year 1984 1990 2001 Mortgage Interest 12.4% 10% 7.0% Rate Inflation Rate 4.3% 5.4% 2.8%