a. Your friend is asking you for a loan of $1,000. You do not plan on charging your friend any interest. Is it better to lend him money when interest rates are at 1% or at 5%?

b. You have $10,000 in your savings account, and your college tuition for the year will be $10,000. Interest rates are 10%. Does it matter if you choose to borrow $10,000 from the bank to pay for your tuition versus using all of your savings? Point out why this may be unrealistic.

c. If the Federal Reserve lowers interest rates, explain why companies are more likely to borrow money. Explain what effects this may have on the whole economy