Answer the following:
A bank makes a loan at a 7.0% nominal interest rate to a
business. For each of the following scenarios, calculated the
expected and actual real interest rates on the loan and state
whether the bank is better-off, worse-off, or just as well-off as
it expected.
Inflation was expected to be 4%, but actual inflation was
2%
Inflation was expected to be 3%, but actual inflation was
3%
Inflation was expected to be 2% and actual inflation...