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Suppose a lender and a borrower both agree that 5% is a fair interest rate on a one-year loan, but inflation is expected to be

Suppose a lender and a borrower both agree that 5% is a fair interest rate on a one-year loan, but inflation is expected to be 6% over the next year. In that case, the bank in effect pays the household $1 for the household to use the funds, meaning income is redistributed from the to the

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