The inflation premium: A. increases the real return. B. is inversely related to the time to maturity. C. remains constant over t
1 answer:
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Answer:
(a) N = 10.08
(b) N = 10.89
(c) 19.05
Explanation:
(a)
N = 10.08
(b)
N = 10.89
One thing to observe here is that percentage increase in the real wage is always equal to the percentage increase in nominal wage. Same can be verified with different values.
(c) It's given that the real wage is kept at $ 12 which was the same in the last year as well.
So % increase would be zero.
However, if that $ 12 is considered as a Nominal wage in the current year,then,
= 19.05