Presume that the nominal rate of interest is four percent, Microeconomics

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Presume that the nominal rate of interest is four percent

Presume that the nominal rate of interest is four percent and the inflation premium is one percent.

1. What is the real interest rate? %?

2. Alternatively, suppose that the real interest rate is 2 percent and the nominal interest rate is 6%.

3. What is the inflation premium? %?

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Microeconomics: Presume that the nominal rate of interest is four percent

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Microeconomics: Presume that the nominal rate of interest is four percent

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