1. How do the costs of inflation depend on whether it is anticipated, unanticipated, or variable?

2. What, if any, are the costs of deflation?

3. What is the real interest rate in the United States today? In Japan?

Note: These are trick questions. For example, the questions do not state whether we are discussing short- or long-term interest rates, or risky vs. safe rates. It also does not say how to find a proxy for expected inflation (if you need one). State your assumptions and answer.