Posted by **maya** on Monday, April 25, 2011 at 1:01am.

supposes that a borrower and a lender agree on the nominal interest rate to be paid on a loan. Then inflation turns out to be higher than they both expected. Using a method similar to the GDP deflator, compute the percentage change of the overall price level. Also use 2009 as the base year.Is the inflation rate in 2010 the same using the two methods? Explain why or why not.

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