Technical 1. The effect of inflation accumulates over time in the same way as does compound interest. If inflation is at, in year. t and , + 1 in year t + 1, then the 2-year inflation rate equals (1 + n) X (1 + , + 1), which is approximately, but not exactly, equal to , + , + 1. a. Suppose inflation runs 2 percent per year 2 years in a row? Give the approximate and exact 2-year inflation rates. Now do the same if the inflation rate were 7 percent. b. Suppose inflation runs 2 percent per year for 40 years in a row. Give the approximate and exact 40-year inflation rates. Now do the same if the inflation rate were 7 percent. 2. Suppose you borrow $6,000 in student loans at a 5 percent annual interest rate in 2017. a. How much will you owe after 10 years of accumulating debt? b. If inflation is 6 percent per year over this period, how much will you owe after 10 years in real 2017 dollars? c. Who is the loser in this scenario, you or the bank