the nominal interest rate is 7.90% and the expected inflation is 2.96% . what is the...

Question

Question

the nominal interest rate is 7.90% and the expected inflation is 2.96% . what is the implied real rate of interest

Answer 1

Answer #1

Real rate=(1+nominal rate)/(1+inflation rate)-1

=[(1+0.079)/(1+0.0296)]-1

=(1.079/1.0296)-1

which is equal to

=4.8%(Approx).

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Answer 2

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