The table below has in the first column the expected inflation rate and the second column contains the actual inflation rate. Using your knowledge about real and nominal rates, which years are better for borrowing compared to lending? Explain your reasoning. Year Expected Inflation (%) Actual Inflation (%) 2011 3.76 3.14 2012 1.62 2.07 2013 1.52 1.47 2014 1.72 1.62 2015 0.08 0.12 2016 1.00 1.27 2017 2.06 2.14 2018 2.73 2.43 2019 1.77 1.81 2020 1.37 1.25
The table below has in the first column the expected inflation rate and the second column contains the actual inflation rate. Using your knowledge about real and nominal rates, which years are better for borrowing compared to lending? Explain your reasoning. Year Expected Inflation (%) Actual Inflation (%) 2011 3.76 3.14 2012 1.62 2.07 2013 1.52 1.47 2014 1.72 1.62 2015 0.08 0.12 2016 1.00 1.27 2017 2.06 2.14 2018 2.73 2.43 2019 1.77 1.81 2020 1.37 1.25
Chapter13: Inflation
Section: Chapter Questions
Problem 14SQ
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The table below has in the first column the expected inflation rate and the second column contains the actual inflation rate. Using your knowledge about real and nominal rates, which years are better for borrowing compared to lending? Explain your reasoning.
Year | Expected Inflation (%) | Actual Inflation (%) |
2011 | 3.76 | 3.14 |
2012 | 1.62 | 2.07 |
2013 | 1.52 | 1.47 |
2014 | 1.72 | 1.62 |
2015 | 0.08 | 0.12 |
2016 | 1.00 | 1.27 |
2017 | 2.06 | 2.14 |
2018 | 2.73 | 2.43 |
2019 | 1.77 | 1.81 |
2020 | 1.37 | 1.25 |
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