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10. Suppose I want to borrow money from the bank for one year, but only if the real interest rate is 3.5 percent or less
10. Suppose I want to borrow money from the bank for one year, but only if the real interest rate is 3.5 percent or less (i.e., r 3.5%). The bank quotes me a nominal interest rate of i = 7 percent. The CPI is currently 80, and economists forecast that next year the CPI will be 83. Assuming that I agree with the economists' forecasts, should I take the loan? (a) No, my real interest rate is more than 3.5 percent (b) It makes no difference to me whether I take the loan or not (c) Yes, my real interest rate is less than 3.5 percent (d) I don't have enough information to make a decision
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