Determine the rate of inflation

Reference no: EM1348289

According to the Fisher effect, if the real interest rate is 3 percent and the nominal interest rate is 8 percent, what rate of inflation is the financial marketplace expecting? Explain the reasoning behind your answer. If the nominal rate rises to 11 percent and following the Fisher effect, what would you conclude about the expected inflation rate? And the real interest rate?

Reference no: EM1348289

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