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andre [41]
3 years ago
9

Assume a nominal interest rate on one-year U.S. Treasury Bills of 2.60% and a real rate of interest of 1.00%. Using the Fisher E

ffect Equation, what is the approximate expected rate of inflation in the U.S. over the next year?
Business
1 answer:
kati45 [8]3 years ago
6 0

Answer:

1.58%

Explanation:

Fisher equation:

(1 + nominal interest rate) = (1 + real interest rate) x (1 + expected rate of inflation)

1.026 = 1.01 x (1+expected rate of inflation_)

--> Expected rate of inflation = 1.58%

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