Scenario: Effects of Deriation The nominal interest rate is 7% on a 1-year loan for...
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Scenario: Effects of Deriation The nominal interest rate is 7% on a 1-year loan for $1,000. The lender had anticipated an inflation rate of 2% for the coming year. During the year, however, the economy experienced deflation of 4%. Reference: Ref 16-11 (Scenario: Effects of Deflation) The actual real interest rate received by the lender. was: a) 5%. Ob) 2%. c) 3%. O d) 11%
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