Fisher effect
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10. Suppose the equilibrium real rate is 3% and the expected rate of inflation in the U.S. is 4%. What is the equilibrium nominal interest rate?
11. What is the equilibrium nominal 1-year interest rate if the required real rate of return is 3% and the expected rate of inflation is 5%?
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Solution Summary
This posting provides the solution to the student's question. The equilibrium nominal one-year interest rate required for a rate of return is determined.
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