If the Short-Term Nominal Interest Rate Is 3

question 94

Multiple Choice

If the short-term nominal interest rate is 3.4%,the term structure effect is 1.2%,the default-risk premium is 1.4%,and the expected rate of inflation is 2.7%,the long-term real interest rate will be

• A) -1.9%.
• B) 0.5%.
• C) 3.3%.
• D) 8.7%.