Suppose the real interest rate is 3% and expected inflation is 3%. What is the nominal...

Question

Question

Suppose the real interest rate is 3% and expected inflation is 3%. What is the nominal interest rate? nominal interest rate:

Answer 1

Answer #1

Nominal interest rate = real interest rate + expected inflation

So,

Nominal interest rate = 3% + 3% = 6%

Nominal interest rate = 6%

Answer 2

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