Question: 1. Suppose that the inflation rate is expected to decrease in the next 5 years. As a result, should you take out a 5-year auto

1. Suppose that the inflation rate is expected to decrease in the next 5 years. As a result, should you take out a 5-year auto loan today given the interest rate on the loan is fixed today? Please explain.

2.Using the equation for money market in chapters 4&5 (real money supply = real moneydemand), what will happen to the price level today if the expected inflation rate is lower, holding everything else constant? Show your work.

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