3. Suppose the annual interest rate is R = 0.10 (10%). If the expected inflation rate is n =0.02 (2%), then the real interest rate is !3! Or- 0.8 Or= 0.12 Or- 0.006 Or= 0.08 Or- 0.06

Microeconomic Theory
12th Edition
ISBN:9781337517942
Author:NICHOLSON
Publisher:NICHOLSON
Chapter17: Capital And Time
Section: Chapter Questions
Problem 17.7P
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3. Suppose the annual interest rate is R = 0.10 (10%). If the expected inflation rate is n =0.02
(2%), then the real interest rate is
!3!
%3D
Or- 0.8
Or= 0.12
Or- 0.006
Or= 0.08
Or- 0.06
Transcribed Image Text:3. Suppose the annual interest rate is R = 0.10 (10%). If the expected inflation rate is n =0.02 (2%), then the real interest rate is !3! %3D Or- 0.8 Or= 0.12 Or- 0.006 Or= 0.08 Or- 0.06
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