The following table gives the average nominal interest rates on six-month Treasury bills spanning the years 1971 and 1975, which determined the nominal interest rate paid by the U.S. government when it issued debt in that time period. The table also gives the inflation rate for the years 1971 t 1975. (All rates rounded to the nearest 0.1 percent.) Year 1971 1972 1973 1974 1975 INTEREST RATE (Percent) Source: "FRED Economic Data," Federal Reserve Bank of St. Louis, last modified September 23, 2019, accessed September 24, 2019, https://fred.stlouisfed.org. On the following graph, use the orange points (square symbol) to plot the nominal interest rates for the years 1971 to 1975. Next, use the green points (triangle symbol) to plot the real interest rates for those years. 8.0 7.0 6.0 5.0 4.0 3.0 2.0 1.0 0 -1.0 -2.0 -3.0 Nominal Interest Rate Inflation Rate (Percent) 4.5 4.5 7.2 8.0 6.1 1970 OOO O O 1971 O 1972 O 1973 O 1974 1971 O 1975 (Percent) 4.2 3.3 6.3 11.0 9.1 1972 1973 YEAR 1974 According to the table, in which year did buyers of six-month Treasury bills receive the highest real return on their investment? 1975 1976 Nominal Interest Rate Real Interest Rate (?)
The following table gives the average nominal interest rates on six-month Treasury bills spanning the years 1971 and 1975, which determined the nominal interest rate paid by the U.S. government when it issued debt in that time period. The table also gives the inflation rate for the years 1971 t 1975. (All rates rounded to the nearest 0.1 percent.) Year 1971 1972 1973 1974 1975 INTEREST RATE (Percent) Source: "FRED Economic Data," Federal Reserve Bank of St. Louis, last modified September 23, 2019, accessed September 24, 2019, https://fred.stlouisfed.org. On the following graph, use the orange points (square symbol) to plot the nominal interest rates for the years 1971 to 1975. Next, use the green points (triangle symbol) to plot the real interest rates for those years. 8.0 7.0 6.0 5.0 4.0 3.0 2.0 1.0 0 -1.0 -2.0 -3.0 Nominal Interest Rate Inflation Rate (Percent) 4.5 4.5 7.2 8.0 6.1 1970 OOO O O 1971 O 1972 O 1973 O 1974 1971 O 1975 (Percent) 4.2 3.3 6.3 11.0 9.1 1972 1973 YEAR 1974 According to the table, in which year did buyers of six-month Treasury bills receive the highest real return on their investment? 1975 1976 Nominal Interest Rate Real Interest Rate (?)
Principles of Economics 2e
2nd Edition
ISBN:9781947172364
Author:Steven A. Greenlaw; David Shapiro
Publisher:Steven A. Greenlaw; David Shapiro
Chapter22: Inflation
Section: Chapter Questions
Problem 34P: The total price of purchasing a basket of goods in the United Kingdom over four years is: year...
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