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What is the real interest rate

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Question 1 - Suppose the real interest rate is 6 percent and the expected inflation is 2 percent. What would you expect the nominal rate of interest to be? Present the formula, show your solution and highlight your answer.

Question 2 - Suppose that Treasury bills are currently paying 9 percent and the expected inflation is 3 percent. What is the real interest rate? Present the formula, show your solution and highlight your answer.

Reference no: EM133132191

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