1. Consider Economy A in the table below. Situ ation policy Nominal interest ed inflatio Expect Real policy Risk premiu Nominal Real borrowing A rate 0 n interest rate m interest borrowing interest rate rate 8 10 a. Given the information in the table, calculate the missing values of expected inflation, real policy interest rate and risk premium for Economy A. b. What are the 2 factors that determine risk premium? Explain how these 2 factors changes over the course of the business cycle (i.e., economic booms and recessions). c. Explain why the conventional monetary policy becomes ineffective for Economy A.