Given the anticipated rate of inflation (i) of 1.7% and the real rate
Given the anticipated rate of inflation (i) of 1.7% and the real rate of interest (R) of 1.4%, find the nominal rate of
interest (r).
What will be an ideal response?
ANSWER
r = R + i + Ri
r = .014 + .017 + (.014 )(.017 )
r = .031 + .000238 = .031238
r = 3.12%
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