Explain importance of price escalation in economic analysis

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1. A loan of $2,000 is made at an interest rate of 7% when the inflation rate is 10% and paid in one installment after 1 year. Calculate the amount paid. What is the difference between this result and the result obtained if the inflation is ignored?

2. Explain the importance of price escalation in economic analysis.

Reference no: EM131285829

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