What would you expect the nominal rate of interest to be if the real rate is 4% and the expected inflation rate is 7%?
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What would you expect the nominal rate of interest to be if the real rate is 4% and the expected inflation rate is 7%?
11%
The real rate is the nominal rate minus inflation. So
real=nominal-inflation
gives
nominal=real+inflation=4+7=11
Love
Lena - [email protected]
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