Suppose two parties agree that the expected inflation rate for the next year is 6 percent. Based on this, they enter into a loanagreement where the nominal interest rate to be charged is 6 percent. If inflation for the year turns out to be 4 percent, who gains andwho loses?Instructions: Enter your responses as whole numbers.The ex ante real interest rate is10 percent. This is what borrowers think they are paying and lenders think theyare earning. With the actual inflation of 4 percent, the ex post real interest rate will bepercent.

The ex ante real interest rate refers to the expected or anticipated real interest rate on an…

Suppose two parties agree that the expected inflation rate for the next year is 6 percent. Based on this, they enter into a loan agreement where the nominal Interest rate to be charged is 6 percent. If inflation for the year turns out to be 4 percent, who gains ar who loses? Instructions: Enter your responses as whole numbers. The ex ante real interest rate is percent. This is what borrowers think they are paying and lenders think they are earning. With the actual inflation of 4 percent, the ex post real interest rate will be percent.