Small Kevin Neary

Budget: $15

Solved!

CPI is 100. Both Taz and Jaz think it’ll be 108 next year. Keeping that in mind, Jaz lends Taz $100 at an interest rate at 5%. CPI is actually 110 that year. Who is worse off and who is better off?

Answer

Small Tutor Gautham Shiyakino

Expected inflation is [CPInow-CPIthen/CPIthen=108-100/100=8/100=8%]. Actual infla...


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