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2) Case 1. Interest rate i = 10% Expected inflation = 2% (you expect wages and prices to be 2% higher at the end of
2) Case 1. Interest rate i = 10% Expected inflation = 2% (you expect wages and prices to be 2% higher at the end of the year than they are now.) Calculate and fill in the following numbers. What you must pay bank = $ MACHINE NextYear = $ SHOELACES P Next Year = $ W SHOELACEWORKERS = $ Next Year p MACHINE SHOELACEWORKERS NextYear + (D SHOELACES * 100) - (W NextYear NextYear * 4) = $ Should you make the investment? Yes or no? What is the real interest rate
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