Unformatted text preview: π e ),the nominal interest rate (i), the real interest rate (r), and real GDP (Y)? 4. Firm A takes a one year loan from the bank at a nominal interest rate of 10%. Both firm A and the bank expect that over the next year inflation will be 5%. If inflation turns out to be 3% who is hurt in real terms relative to their expectations, firm A or the bank?...
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This note was uploaded on 04/17/2010 for the course LAPS ECON2350 a taught by Professor Barrysmithandtasso during the Spring '10 term at York University.
- Spring '10