The 1970s was a period of high inflation in many industrialized countries, including the United States.

a. Due to the increase in the inflation rate, lenders, including credit card companies, revised their nominal interest rates upward. How is the inflation rate related to the nominal interest rate that credit card companies charge? Why would lenders need to increase the nominal interest rate when the inflation rate increases?

b. Usury laws place an upper limit on the nominal rate of interest that lenders can charge on their loans. In the 1970s, in order to avoid usury laws, some credit card companies moved to states where there were no ceilings on interest rates. Why would credit card companies move to states without usury laws during a period of high inflation like the 1970s?