Question: 2. Consider the following four situations. In which situation would a borrower be best off and in which situation would a lender be best off?

2. Consider the following four situations. In which situation would a borrower be best off and in which situation would a lender be best off? (8 marks, 2 marks each) a. The nominal interest rate is 14 percent, and the inflation rate is 17 percent. b. The nominal interest rate is 7 percent, and the inflation rate is 3 percent. c. The nominal interest rate is 4 percent, and the inflation rate is -2 percent. d. The real interest rate is 6 percent, and the inflation rate is 2 percent

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