Explain why you would rather be a borrower during a period of unexpected rising inflation and a lender during a period of unexpected declining inflation.

Pick one of the following questions and answer :
(S) Essentials of Economics
R. Glenn Hubbard and Anthony Patrick O’Brien, 2019
Pearson
ISBN.13: 978-0-134-79773-1

1- Explain why you would rather be a borrower during a period of unexpected rising inflation and a lender during a period of unexpected declining inflation.
2- Suppose you are an advisor to the Business Cycle Dating Committee. You are asked to look at macroeconomic data to evaluate whether the economy has entered a recession this year. Which data do you look at? How does the economy behave at the onset of a recession?
3- Explain how the static aggregate demand and aggregate supply model gives us misleading results about the price level, particularly with respect to decreases in aggregate demand. Describe how the aggregate demand curve is different in the dynamic model as compared to the static model. Describe how potential GDP is different in the dynamic model as compared to the static model.

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