ECN 102 Extra Credit
Storyboard Text
- Hey, remember when I loaned you that $100 with a 10% interest rate?
- Sure I do.
- Well, since inflation is at 10% now, I decided I'm changing the interest rate to 15%.
- Why would you do that? Thats not fair!
- Because of The Fisher Effect. If I kept the 10% interest rate with 10% inflation, I would make no return! Instead, I'll have to charge 15% interest rate on that $100 to get a 5% return! 
- Well that makes sense, but did you have to take me out fishing just to tell me?
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