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The annual inflation rate in Santa Gata is now 10%. The Santa Gatan bankers have been demanding that their government do more to bring down

The annual inflation rate in Santa Gata is now 10%. The Santa Gatan bankers have been demanding that their government do more to bring down the rate of inflation. Explain why the bankers would be so concerned about inflation. Would indexing (changing a nominal value to account for inflation, like using a cost-of-living adjustment) solve the problem?

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