Suppose the inflation rate is expected to be 1.5%, but the actual inflation rate turns out to be 0.5%. Which of the following statements is correct, assuming a constant nominal interest rate?

a. The ex post real interest rate is one percentage point lower than the ex ante real interest rate.

b. The economy is experiencing a deflationary episode.

c. Lenders will benefit, and borrowers will lose.

d. Borrowers will benefit, and lenders will lose.

Assume Lilliput is a small open economy. Lilliput's domestic output (Y) is $650 million, while its domestic spending is $750 million and total imports are $350 million. Based on this information, Lilliput runs a trade ________, and total exports are ________.

a.

deficit; $50 million

b.

deficit; $250 million

c.

surplus; $50 million

d.

surplus; $250 million

plz help both are question correct and explain