If the Nominal Interest Rate on a One-Year Loan Was

question 93

Multiple Choice

If the nominal interest rate on a one-year loan was 7%,the expected inflation rate over the year was 3% and the actual inflation rate over the year turned out to be 3.5%,then the expected real interest rate equals

• A)6)5%.
• B)4)0%.
• C)3)75%.
• D)3)5%.

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