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You are given the following information about the economy: the nominal interest rate percent; the real rate of interest = 6 p
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Answer #1

You are given the following information about the economy: the nominal interest rate = 8 percent; the real rate of interest = 6 percent. The inflation premium is:

Inflation premium = Nominal Rate - Real Rate

=> inflation = 8 - 6 = 2%

Inflation premium = 2 per cent

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