4. Inflation and interest rates The following table shows the average nominal interest rates on six-month Treasury bills between 1997 and 2001, which determined the nominal interest rate that the U.S. government paid when it issued debt in those years. The table also shows the inflation rate for the years 1997 to 2001. (All rates are rounded to the nearest tenth of a percent.) Nominal Interest Rate Inflation Rate Year (Percent) (Percent) 1997 5.2 2.3 1998 4.8 1.5 1999 4.8 2.2 2000 5.9 2001 3.4 3.4 2.8 Source: "FRED Economic Data," Federal Reserve Bank of St. Louis, last modified September 23, 2019, accessed September 24, 2019, https://fred.stlouisfed.org. On the following graph, use the orange points (square symbol) to plot the nominal interest rates for the years 1997 to 2001. Next, use the green points (triangle symbol) to plot the real interest rates for those years.
4. Inflation and interest rates The following table shows the average nominal interest rates on six-month Treasury bills between 1997 and 2001, which determined the nominal interest rate that the U.S. government paid when it issued debt in those years. The table also shows the inflation rate for the years 1997 to 2001. (All rates are rounded to the nearest tenth of a percent.) Nominal Interest Rate Inflation Rate Year (Percent) (Percent) 1997 5.2 2.3 1998 4.8 1.5 1999 4.8 2.2 2000 5.9 2001 3.4 3.4 2.8 Source: "FRED Economic Data," Federal Reserve Bank of St. Louis, last modified September 23, 2019, accessed September 24, 2019, https://fred.stlouisfed.org. On the following graph, use the orange points (square symbol) to plot the nominal interest rates for the years 1997 to 2001. Next, use the green points (triangle symbol) to plot the real interest rates for those years.
Principles of Economics 2e
2nd Edition
ISBN:9781947172364
Author:Steven A. Greenlaw; David Shapiro
Publisher:Steven A. Greenlaw; David Shapiro
Chapter22: Inflation
Section: Chapter Questions
Problem 34P: The total price of purchasing a basket of goods in the United Kingdom over four years is: year...
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Please give a detailed solution with an explanation for the following images. Please double-check your answers and sources before submitting the final answer. For the graph please make sure it is visible, clear, and label the coordinates too.
Transcribed Image Text:(?
6.0
5.0
Nominal Interest Rate
4.0
Real Interest Rate
3.0
2.0
1.0
1996
1997
1998
1999
2000
2001
2002
YEAR
According to the table, in which year did buyers of six-month Treasury bills receive the highest real return on their investment?
1997
1998
1999
2000
2001
INTEREST RATE (Percent)
Transcribed Image Text:4. Inflation and interest rates
The following table shows the average nominal interest rates on six-month Treasury bills between 1997 and 2001, which determined the nominal
interest rate that the U.S. government paid when it issued debt in those years. The table also shows the inflation rate for the years 1997 to 2001. (All
rates are rounded to the nearest tenth of a percent.)
Nominal Interest Rate
Inflation Rate
Year
(Percent)
(Percent)
1997
5.2
2.3
1998
4.8
1.5
1999
4.8
2.2
2000
5.9
3.4
2001
3.4
2.8
Source: "FRED Economic Data," Federal Reserve Bank of St. Louis, last modified September 23, 2019, accessed September 24, 2019, https://fred.stlouisfed.org.
On the following graph, use the orange points (square symbol) to plot the nominal interest rates for the years 1997 to 2001. Next, use the green
points (triangle symbol) to plot the real interest rates for those years.
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