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Costaguanan Stock Market: Real vs. Nominal Returns

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The Costaguanan stock market provided a rate of return of 95 percent. The inflation rate in Costaguana during the year was 80 percent. In the United States, in contrast, the stock market return was only 12 percent, but the inflation rate was only 2 percent. Which country's stock market provided the higher real rate of return?

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This solution contains explanations regarding the Costaguanan stock market and the real rates of return.

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