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Assume a Nominal Interest Rate on One-Year U

Question 7

Multiple Choice

Assume a nominal interest rate on one-year U.S. Treasury Bills of 3.80% and a real rate of interest of 2.00%. Using the Fisher Effect Equation, what is the exact expected rate of inflation in the U.S. over the next year?


A) 1.84%
B) 1.80%
C) 1.76%
D) 1.72%

Correct Answer:

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