Alison lends $100 to Vanessa for 1 year.Alison expects that inflation will be 10%.If Alison wishes to maintain the real value of her $100,she should expect payment from Vanessa in the amount of:

Question

Quizplus · Accepted Answer

To maintain the real value of her $100 after 10% inflation, Alison should expect $110, as this amount compensates for the decrease in purchasing power due to inflation.

Alison Lends $100 to Vanessa for 1 Year