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3. Mike and Jane meet Sam, the banker, to work out the details of a loan. Mike, Jane, and Sam all expect that inflation will
3. Mike and Jane meet Sam, the banker, to work out the details of a loan. Mike, Jane, and Sam all expect that inflation will be 1.9% over the term of the loan, and they agree on a nominal interest rate of 4.5%. In actuality, the inflation rate is 2.3% over the term of the loan. (a) What was the expected real interest rate? (2 marks) (b) What was the actual real interest rate? (2 marks) (c) Who benefited and who lost because of the unexpected inflation? Explain. (3 marks) 4. (a) In Canada, citizens benefit from property rights, whether it be over real estate, land, intellectual
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