Business, 07.10.2020 21:01 carcon2019

Initially, Stacy earns a salary of $300 per year and Virginia earns a salary of $200 per year. Stacy lends Virginia $100 for one year at an annual interest rate of 16% with the expectation that the rate of inflation will be 12% during the one-year life of the loan. At the end of the year, Virginia makes good on the loan by paying Stacy $116. Consider an unanticipated decrease in the rate of inflation. The rise in prices and salaries turns out to be 2% over the course of the year rather than 12%. The nominal value of Stacy's salary after one year is

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Initially, Stacy earns a salary of $300 per year and Virginia earns a salary of $200 per year. Stacy...

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