1. Why might the actual real interest rate differ from the expected real interest rate? Would this possible difference be of more concern to you if you were considering making a loan to be paid back in 1 year or a loan to be paid back in 10 years?
2. For several decades in the late nineteenth century, the price level in the United States declined. Was this likely to have helped or hurt U.S. farmers who borrowed money to buy land? Does your answer depend on whether the decline in the price level was expected or unexpected? Briefly explain.