Question

 

4. Inflation and interest rates The following table shows the average nominal interest rates on six-month Treasury bills between 2004 and 2008, which determined the nominal interest rate that the U.S. government paid when it issued debt in those years. The table also shows the inflation rate for the years 2004 to 2008. (All rates are rounded to the nearest tenth of a percent.)

On the following graph, use the orange points (square symbol) to plot the nominal interest rates for the years 2004 to 2004 Next, use the green points (triangle symbol) to plot the real interest rates for those years.

Answer 1

Nominal de rate = interest rate - inflation sate Real interest Real Interest sale Year 2ook 1.6 2005 2006 2007 1.5 -2.2 2008 4 .4 6 0 - Nw Nominal interest date -2.2 Real intesest sate 2008 2009 2007 2006 2005 2004 2003 2006 - is correct.