Real interest rates
The two-year interest rate is 13.2% and the expected annual inflation rate is 6.6%.
a.What is the expected real interest rate? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.)
Expected real interest rate %
b-1. If the expected rate of inflation suddenly rises to 8.6%, what does Fisher’s theory say about how the real interest rate will change?
b-3. If the expected rate of inflation suddenly rises to 8.6%, what will be the new nominal rate? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.)
Nominal rate %