With the real rate at 3 percent, most loans were made at 10 percent last year. This year interest rates have declined to 8 percent. What was the expected inflation rate last year?
A) 5%
B) 2%
C) 7%
D) 8%

Question

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The Answer of With the real rate at 3 percent, most loans were made at 10 percent last year. This year interest rates have declined to 8 percent. What was the expected inflation rate last year?
A) 5%
B) 2%
C) 7%
D) 8%

With the Real Rate at 3 Percent, Most Loans Were