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The two-year interest rate is 13.2% and the expected annual inflation rate is 6.6%. a. What is the expected real interest rate?
The two-year interest rate is 13.2% and the expected annual inflation rate is 6.6%.
a.What is the expected real interest rate?
Expected real interest rate %
b-1. If the expected rate of inflation suddenly rises to 8.6%, what does Fisher's theory say about how the real interest rate will change?
Real rate decreases Real rate increases Real rate does not change
b-3. If the expected rate of inflation suddenly rises to 8.6%, what will be the new nominal rate?
Nominal rate