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Course: AP??/College Macroeconomics?>?Unit 2
Lesson 5: Costs of InflationThe costs of inflation
Problem
Melisandre asks you to loan her until next year. She offers to pay you 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?