In the economy of Center Earth, Pear is the only good being produced, and a Pear sells for $2 at the beginning of 2012. At the start of the year, Mike approaches John for a loan of $2000 for a period of one year. John and Mike are both expecting an inflation rate of 10%. If John desires to have a real interest rate of 6% on this loan at the end of the year when the loan is repaid, what is the nominal rate of interest that John must charge Mike given the expected inflation rate? Suppose that after agreeing on a nominal interest rate of 15% for the loan, the actual rate of inflation turns out to be 6% for 2012. What's the real interest rate given the 5% actual rate of inflation?