8. Suppose real interest rate r = 4% and expected inflation rate for the following year...

 

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8. Suppose real interest rate r = 4% and expected inflation rate for the following year En = 4%. (a) What is the nominal interest rate? (2 points) (b) What is the ex ante real interest rate? (2 points) Suppose the actual inflation rate at the end of the following year turned out to be 6%. (c) What is the ex post real interest rate? (3 points) (d) Borrowers (gain/lose). and lenders (gain/lose) (f) Borrowers (gain/lose). Suppose the actual inflation rate at the end of the following year turned out to be 2% (e) What is the ex post real interest rate? (3 points) (4 points) and lenders (gain/lose) (4 points) 8. Suppose real interest rate r = 4% and expected inflation rate for the following year En = 4%. (a) What is the nominal interest rate? (2 points) (b) What is the ex ante real interest rate? (2 points) Suppose the actual inflation rate at the end of the following year turned out to be 6%. (c) What is the ex post real interest rate? (3 points) (d) Borrowers (gain/lose). and lenders (gain/lose) (f) Borrowers (gain/lose). Suppose the actual inflation rate at the end of the following year turned out to be 2% (e) What is the ex post real interest rate? (3 points) (4 points) and lenders (gain/lose) (4 points)

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Answer A We know that Real Interest rate nominal interest rate expected inflation ... View the full answer