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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- Spring '10
- Inflation, 10%, 5%, 3%, one year, analytical exercises