f the real interest rate is minus 1.4% and the nominal interest rate is 0.6%, expected...
f the real interest rate is minus 1.4% and the nominal interest rate is 0.6%, expected inflation equals
A. minus 2%. B. minus 0.8%. C. 0.8%. D. 2%.
Homework Answers
Nominal Interest Rate = Real Interest Rate + Inflation rate
Inflation rate = Nominal Interest rate - Real Interest rate
= 0.6% - (-1.4%)
= 2%
Hence, the correct answer is D.2%
The inflation rate is 2%
Answer : Option B : minus 0.8%
As per Fisher's equation :
Inflation rate
= Nominal rate - Real rate
= 0.6% - 1.4%
= - 0.8% = Option B.
Add Answer to:
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