Homework Answers
Expected real interest rate = Nominal interest rate - expected inflation rate
= 4% - (Pe t + 1 - Pt)*100/Pt
= 4% - (116.6 - 110)*100/110
= 4% - 6%
= -2%
It is negative 2 percent.
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= Natural rate of interest + Current inflation + 1/2(Inflation gap)
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Homework Blanchard Chapter 6-1, 6-2 1) Calculate the real interest rate using first the mathemati...
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Use the following Taylor rule to calculate what would happen to
the real interest rate if inflation increased by 7 percentage
points.
Target federal funds rate
= Natural rate of interest + Current inflation + 1/2(Inflation gap)
+ 1/2(Output gap)
Use the following Taylor rule to calculate what would happen to the real interest rate if inflation increased by 7 percentage points. Target federal funds rate = Natural rate of interest + Current inflation + 1/2(Inflation gap) + 1/2(Output gap)...
Please show your work
If the real interest rate is 7.3% and the inflation rate is 4.2%, what is the nominal interest rate? Enter you answer as a percentage. Do not enter the percentage sign into your answer Enter your response below (rounded to 2 decimal places)
People anticipate the inflation rate to be 8%. Banks are making loans at a 12% interest rate. Therefore, O A. the real rate of interest is 12% and the nominal rate is 4% OB. the real rate of interest is 12% and the nominal rate is 8% O C. the real rate of interest is 4% and the nominal rate is 12% O D. the real rate of interest is 8% and the nominal rate is -4% You are negotiating...
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23
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