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there interest rate is 2.7% and the inflation rate is 1.2%, what is the nominal interest rate? Enter you answer as a percenta
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Answer #1

Nominal Interest Rate = 3.93%

  • Real interest rate = 2.7%
  • Inflation rate = 1.2%
  • Nominal Interest Rate = [(1+real interest rate) × (1+inflation rate)] - 1 = [(1+0.027) × (1+0.012)] -1 = 0.039324 = 3.93%
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