If provided the nominal rate of interest (r) of 7.4% and the anticipat
If provided the nominal rate of interest (r) of 7.4% and the anticipated rate of inflation (i) of 4.5%, what is the
real rate of interest (R)?
What will be an ideal response?
ANSWER
r = R + i + Ri
.074 = R + .045 + (.045)(R)
.074 – .045 = 1.045R
.029 = 1.045R
R = .02775 = 2.
78%
Expert paper writers are just a few clicks away
Place an order in 3 easy steps. Takes less than 5 mins.