Question

John, who has an inflation adjusted wage, would like to borrow a loan from the Bank of Titon. Suppose the inflation rate is predicted to be 8%. In order for the loan payments to be more favorable to John, the interest rate should be:

Answer 1

In order for the loan payments to be more favorable to John, the interest rate should be:6%.

What is inflation?

Inflation occur when their is increase in the price of goods and services,

Based on the given scenario if the inflation rate is  8%. The best alternative is for John to receive the interest rate at 6% as this will enable the loan payment to favor him compare to 8% which is higher.

Therefore In order for the loan payments to be more favorable to John, the interest rate should be:6%.

Learn more about inflation here:brainly.com/question/777738

#SPJ1