solution
Inflation, nominal interest rates, and real rates. The minister of finance for the State of Tranquility has just estimated the expected Inflation rate for the coming year at 6.75%. If the real rate for the coming year is 3%, what should the nominal interest rates at the central bank of the State of Tranquility be for the coming year? Use the approximate nominal interest rate equation and the true nominal interest rate equation to determine the rates
Using the approximate nominal interest rate equation, what should be the nominal interest rate at the central bank of the State of Tranquility for the coming year? (Round to two decimal places.)
Using the true nominal interest rate equation, what should be the nominal interest rate at the central bank of the State of Tranquility for the coming year? (Round to two decimal places.)
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