If the nominal interest rate on an asset is 10% and inflation is also 8%, what is the real interest rate of that asset? What if inflation is 12%?

Research suggests that macroeconomic factors can explain the dynamics of interest rates in the economy. Suppose we are interested in understanding whether inflation plays a role in explaining interest rates. Fitting a line between the current nominal interest rate i and current inflation we obtain: i = 0.041 -0.147 What is the expected level of interest rates when inflation is at the level of 4%?

There is a persistent fear that there will be a high level of deflation. Many economists warn that it may be worse for the economy than if there is high inflation. Suppose that Herb is in debt and has to pay a 5.255.25% nominal interest rate. He expected inflation to be 1.501.50%. Instead, inflation is −2.00−2.00% (deflation). What is the real interest rate that Herb is expected to pay and that Herb is actually paying?

If the nominal rate on a loan is 7.0% and annual inflation is 3.0%, what is the real interest rate for that loan? 3.0% 4.0% 10.0% Not enough information.