You borrow $50,000 today at a rate of 5%. Today, inflation instantly rises to 7% and stays that way for the duration of your loan. Based on the above information today O you will pay the lender back exactly $55,500. O you will pay the lender back exactly $60,700. the real rate of interest on your loan is 10% the real rate of interest on your loan is-2% the real rate of interest on your loan is 2%

Economics:
10th Edition
ISBN:9781285859460
Author:BOYES, William
Publisher:BOYES, William
Chapter7: Unemployment And Inflation
Section: Chapter Questions
Problem 7E
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You borrow $50,000 today at a rate of 5%. Today, inflation instantly rises to 7% and stays that way for the duration of your loan. Based on the above
information today
O you will pay the lender back exactly $55,500.
O you will pay the lender back exactly $60,700.
the real rate of interest on your loan is 10%
the real rate of interest on your loan is -2%
O the real rate of interest on your loan is 2%
Transcribed Image Text:You borrow $50,000 today at a rate of 5%. Today, inflation instantly rises to 7% and stays that way for the duration of your loan. Based on the above information today O you will pay the lender back exactly $55,500. O you will pay the lender back exactly $60,700. the real rate of interest on your loan is 10% the real rate of interest on your loan is -2% O the real rate of interest on your loan is 2%
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