Macroeconomics (Fourth Edition)
4th Edition
ISBN: 9780393603767
Author: Charles I. Jones
Publisher: W. W. Norton & Company
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Question
Chapter 13, Problem 12E
(a)
To determine
Explain the slope of this line.
(b)
To determine
Explain the response of the nominal interest rate to inflation in a good
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Students have asked these similar questions
An investment offers a 12% total return over the coming
year. Bill Morneau thinks the total real return on this
investment will be only 7%.
What does Morneau believe the inflation rate will be
over the next year? (Do not round intermediate
calculations. Round the final answer to 2 decimal
places.)
please use fisher equation
Economics
Suppose that the nominal rate of interest is 7% and the expected inflation rate is 3%. According to the fisher equation, the:
A)
real interest rate will be 3
B)
real interest rate will be nominal interest rate plus expected inflation.
C)
real interest rate will be 8
D)
real interest rate will not change
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%?
Chapter 13 Solutions
Macroeconomics (Fourth Edition)
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