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Difference between the nominal interest rate

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Reference no: EM132550637

The Reserve Bank of New Zealand (RBNZ) has recently cut the OCR to historically low levels.

(i) Using the Fisher Equation, explain the difference between the nominal interest rate and real interest rate.

(ii) With these latest actions of the RBNZ, is it likely that the real interest rate will become negative?

Reference no: EM132550637

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