Answer
25% inflation
Work Step by Step
The lowest real cost of repaying the loan is during the period of inflation because the number of months required to earn the amount needed to repay the loan is the lowest in this environment.
Microeconomics: Principles, Applications, and Tools (8th Edition)
by O'Sullivan, Arthur; Sheffrin, Steven; Perez, Stephen
Published by
Prentice Hall
ISBN 10:
0-13294-886-9
ISBN 13:
978-0-13294-886-9
Chapter 2 - The Key Principles of Economics - Exercises - 2.5 The Real-Nominal Principle - Page 47: 5.9b
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