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Real interest rate from one-year investment

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You invest $100 in an interest-bearing bank account for 1 year. Suppose that the price of apples today is $2 per unit. If the nominal interest in the bank account is 2% and the price of apples a year from now is $2.5, what is the real interest rate from your one-year investment? Explain with words what a real interest rate is.

Reference no: EM132661387

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