(Answered) Q1 inflation can reduce the true cost of debt and

Management Studies

Q1. Inflation can reduce the true cost of debt, and policymakers lower interest rates to encourage borrowing. Can you explain this logic? Is it a good idea then to always take advantage of lower interest rates to borrow and rely on inflation to reduce the cost of debt and to increase your ability to repay the loan?

Q2. If the President controlled monetary policy, would you expect higher or lower inflation? Why?

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