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The prime interest rate is the rate that banks charge their best customers. Based on your new knowledge of real interest rates, and the nominal
The "prime" interest rate is the rate that banks charge their best customers. Based on your new knowledge of real interest rates, and the nominal interest rates and inflation rates given inthe table below, in which of theyears given would it have been best to be a lender? Based on the nominal interest rates and inflation rates given in the table, in which of the years given would it havebeen best to be a borrower?
YearPrime Interest RateInflation Rate
19707.9%5.7%
197410.8%11.0%
197818.9%10.3%
19819.1%7.6%
198412.4%4.3%
199010%5.4%
20017.0%2.8%
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