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Course: Macroeconomics > Unit 2

Lesson 5: Costs of Inflation
Economics
Macroeconomics
Economic indicators and the business cycle
Costs of Inflation
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The costs of inflation

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Problem

Melisandre asks you to loan her $600 until next year. She offers to pay you 10% annual interest. You are very suspicious of her motives and believe she is trying to gain at your expense.
What does Melisandre expect about the inflation rate if you know she is trying to benefit at your expense?
Choose 1 answer: