Table: Interest Rates and Inflation This Table Shows Inflation and Interest Rate Data on Loan

question 145

Essay

Table: Interest Rates and Inflation $$\begin{array} { l c c c c } \hline \text { Year } & \text { Expected } \boldsymbol { \pi } & \text { Actual } \boldsymbol { \pi } & \text { Nominal Interest Rate } & \begin{array} { c } \text { Realized Real } \\\text { Interest Rate }\end{array} \\\hline 2006 & 2 \% & 3 \% & 3 \% & \% \\2007 & 1 \% & 3 \% & 2 \% & \% \\2008 & 2 \% & 3 \% & 4 \% & \% \\2009 & 7 \% & 5 \% & 9 \% & \% \\\hline\end{array}$$
This table shows inflation and interest rate data on loan contracts in different years.
A) Fill in the "Realized Real Interest Rate" column in the table.
B) In which year(s) were the actual real interest rates on loan contracts negative?
C) In which year(s) did lenders gain at the expense of borrowers?
D) In which year(s) did borrowers gain at the expense of lenders?

• A) Fill in the "Realized Real Interest Rate" column in the table.
• B) In which year(s) were the actual real interest rates on loan contracts negative?
• C) In which year(s) did lenders gain at the expense of borrowers?
• D) In which year(s) did borrowers gain at the expense of lenders?

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Definitions:

Factors

Variables that are manipulated or controlled in an experiment to determine their effect on an outcome.

Two Independent

Refers to having two variables in an experiment that are manipulated or changed independently of each other.

Factorial ANOVA

A statistical test used to evaluate the effects of two or more independent variables on a single dependent variable, allowing for the examination of interactions between factors.

Independent Variable

A variable that is manipulated to observe its effect on a dependent variable in an experiment.