sammscott1663 sammscott1663

12-08-2020
Business

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f the nominal interest rate is 7 percent and the real interest rate "is -2.5" percent, then the inflation rate is

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ewomazinoade ewomazinoade

14-08-2020

Answer:

9.7%

Explanation:

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

1.07 = 0.975 x (1 + inflation rate)

(1 + inflation rate) = 1.07 / 0.975

(1 + inflation rate) = 1.097

Inflation rate = 1.097 - 1 = 0.097 = 9.7%

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