Question: A lender and a borrower signed a contract for a $1,000 loan for one year. The lender asked the borrower to pay 3% interest. Inflation

A lender and a borrower signed a contract for a $1,000 loan for one year. The lender asked the borrower to pay 3% interest. Inflation occurred and prices rose by 2% over the next year. At the end of the year, the borrower repaid $1,030 (principal + interest). What is the amount worth in real terms (i.e., after inflation)?

	$1,060.90.
	$1,050.60.
	$1,029.41.
	$1,009.80.

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