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You take out student loans to help pay for your degree at a 5% annual interest rate. Assume the bank expected inflation to
average 3% per year.
a. What real interest rate did the bank expect to earn from your loan?
The bank expected to earn
b. What happens if inflation is actually 5% per year?
If inflation is actually 5%, then the bank will earn
c. If inflation is higher than expected, then
better off.
better off. If it is lower than expected, then
% per year..
% per year
Sagot :
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