Explain the meaning of efficient markets. Why might we expect markets to be efficient most of the time?

Last year Jack bought a $1-$year, U$.$S$.$ Treasury bill with nominal yield of $6\mathrm{.}25\%.$ He expected inflation to be $4\%,$ but actual inflation turned out to be $8\%.$ What was Jack's expected and realized real rate of interest? Explain whether Jack is better or worse off?

The market expects inflation to be $6\mathrm{.}5\%$ and the real rate of interest is estimated at $2\mathrm{.}25\%.$ What is the nominal $1-$year interest rate? If actual inflation turns out to be $4\%,$ what is the realized real rate? Are borrowers or lenders worse off?

Explain why realized rates of interest are sometimes negative, but expected real rates on loans are usually positive. Give an example.

The shape of the yield curve recently changed, and the following chart shows the yields for Treasury securities at different maturity lengths $($start with the numbers in column A$.$ Columns B through E provide additional numbers for practice$)$:

$\backslash$table$[[,$A$,$B$,$C$,$D$,$E$],[1-$Year,$0\mathrm{.}97\%,2\mathrm{.}70\%,6\mathrm{.}20\%,0\mathrm{.}06\%,5\mathrm{.}00\%$