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The costs of inflation

AP.MACRO: MEA‑1 (EU), MEA‑1.H (LO), MEA‑1.H.1 (EK)


Melisandre asks you to loan her dollar sign, 600 until next year. She offers to pay you 10, percent 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: