Q. You may recall from Chapter 7 of the main textbook that the determinants of market interest rates in a lending contract can be broken down into several components: The Real Rate Premium + The Inflation Premium + Default Risk premium + the Liquidity Premium + The Maturity Premium. Now let's say you are lending 10,000 Riyals to the government (or a solid trustworthy friend or relative for one year, where you're dealing with the Risk-Free rate so all that you're concerned with is the Real Rate Premium and the Inflation Premium (This is the default scenario for nominal interest); As a Muslim, you know that demanding interest in a debt contract is forbidden, but shouldn't you be entitled to the inflation component of Nominal Interest and just forgo the Real Rate component? This way you are at least preserving your purchasing power. Discuss this dilemma and explain - in writing - why it is still NOT fair to demand even the inflation component of interest in a lending contract. (Hint 1: Review the function of money. Hint 2: Read Chapter 1 of "Financial & Economic Policy in Islam..". Q. You may recall from Chapter 7 of the main textbook that the determinants of market interest rates in a lending contract can be broken down into several components: The Real Rate Premium + The Inflation Premium + Default Risk premium + the Liquidity Premium + The Maturity Premium. Now let's say you are lending 10,000 Riyals to the government (or a solid trustworthy friend or relative for one year, where you're dealing with the Risk-Free rate so all that you're concerned with is the Real Rate Premium and the Inflation Premium (This is the default scenario for nominal interest); As a Muslim, you know that demanding interest in a debt contract is forbidden, but shouldn't you be entitled to the inflation component of Nominal Interest and just forgo the Real Rate component? This way you are at least preserving your purchasing power. Discuss this dilemma and explain - in writing - why it is still NOT fair to demand even the inflation component of interest in a lending contract. (Hint 1: Review the function of money. Hint 2: Read Chapter 1 of "Financial & Economic Policy in Islam