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Assume that consumers expect inflation to be 3% next year and that the current nominal interest rate is 6%. If actual inflation next year is
Assume that consumers expect inflation to be 3% next year and that the current nominal interest rate is 6%. If actual inflation next year is 2%, which of the following is necessarily true? 2 Borrowers of loans that have fixed interest rates will better off than they were before. Individuals earning fixed interest from their savings accounts will be worse off than they were before. The real interest rate will remain unchanged. Retirees living on fixed social security payments will benefit if actual inflation is less than expected inflation. The real interest rate will decrease
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