Suppose the nominal rate you see on a Treasury bill is 4.31 percent and its real rate is 2.5 percent, what is the inflation rate?
The Fisher equation, which shows the exact relationship between nominal interest rates, real interest rates, and inflation is:
(1 + R) = (1 + r)(1 + h)
r = [(1 + 0.0431) / (1 + 0.025)] - 1
r = 0.0177 or 1.77%
Suppose the nominal rate you see on a Treasury bill is 4.31 percent and its real...
9. Suppose the nominal rate you see on a Treasury bill is 4.31 percent and its real rate is 2.5 percent, what is the inflation rate? 1.77% Please Show All Work
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Suppose the real rate is 9 percent and the inflation rate is 1.4 percent. What rate would you expect to see on a Treasury bill?
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Suppose the real rate is 3.5 percent and the inflation rate is 5.1 percent. What rate would you expect to see on a Treasury bill? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places. (e.g., 32.16).)
Question 3: Suppose the real rate is 1.88 percent and the inflation rate is 0.89 percent. What rate would you expect to earn on a Treasury bill? Use exact formula and answer in percent to two decimals.
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