In the year 2010 (a base year), Lillian needs to take a loan of $1500 from Marios. She will pay back the loan in 2011. Marios wants to charge Lillian an interest rate such that he can increase his purchasing power by $150. In 2011, the GDP deflator is expected to go to 95. What is the nominal interest rate that Marios will charge Lillian on the $1500 loan? Answers: a 4.74% b 5% c 15% d 14.74%
