Economics (7th Edition) (What's New in Economics)
7th Edition
ISBN: 9780134738321
Author: R. Glenn Hubbard, Anthony Patrick O'Brien
Publisher: PEARSON
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Chapter 20, Problem 20.6.8PA
To determine
Calculation of real interest rate.
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The following table shows the average nominal interest rates on six-month Treasury bills between
2004 and 2008, 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 2004 to 2008. (All
rates are rounded to the nearest tenth of a percent.)
Year
2004
INTEREST RATE (Percent)
2006
2007
2008
5.0
3.0
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 2004 to 2008. Next, use the green points (triangle symbol) to plot the real interest
rates for those years.
28
1.0
2005
-16
-40
-40
Nominal Interest Rate Inflation Rate
(Percent)
1.6
2003
3.4
4.8
4.4
1.6
2004
2005
2006
2007
2008
(Percent)
27
3.4
3.2
2.9
3.8
2006
YEAR
Nominal Interest Rate
Real Interest Rate
(?)
According to…
The following table shows the average nominal interest rates on six-month Treasury bills between 1971 and 1975, 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 1971 to 1975. (All
rates are rounded to the nearest tenth of a percent.)
Year
1971
1972
1973
1974
1975
INTEREST RATE (Percent)
Source: "Economic Report of the President (2007)," United States Government Printing Office, last modified February 1, 2007, accessed March 11, 2013,
http://www.gpo.gov/fdsys/pkg/ERP-2007/pdf/ERP-2007.pdf.
On the following graph, use the orange points (square symbol) to plot the nominal interest rates for the years 1971 to 1975. Next, use the green
points (triangle symbol) to plot the real interest rates for those years.
8.0
7.0
6.0
5.0
4.0
1.0
-1.0
-2.0
-3.0
Nominal Interest Rate
(Percent)
4.5
4.5
7.2
7.9
6.1
-4.0
1970
1971
1972
1973
1974
1971
1975
Inflation Rate
(Percent)
4.4
3.2
6.2
11.0…
The following table gives the average nominal interest rates on six-month Treasury bills spanning the years 1971 and 1975, which determined the
nominal interest rate paid by the U.S. government when it issued debt in that time period. The table also gives the inflation rate for the years 1971 to
1975. (All rates rounded to the nearest 0.1 percent.)
Year
1971
1972
1973
INTEREST RATE (Percent)
1974
1975
8.0
Source: "FRED Economic Data," Federal Reserve Bank of St. Louis, last modified September 23, 2019, accessed September 24, 2019, https://fred.stlouisfed.org.
7.0
On the following graph, use the orange points (square symbol) to plot the nominal interest rates for the years 1971 to 1975. Next, use the green
points (triangle symbol) to plot the real interest rates for those years.
6.0
5.0
4.0
3.0
2.0
1.0
0
-1.0 +
-2.0
-3.0
Nominal Interest Rate
(Percent)
4.5
4.5
7.2
1970
OOOO
O 1971
O 1972
O 1973
8.0
O 1974
6.1
1971
O 1975
Inflation Rate
(Percent)
4.2
3.3
6.3
11.0
9.1
1972
1973
YEAR
1974…
Chapter 20 Solutions
Economics (7th Edition) (What's New in Economics)
Ch. 20 - Prob. 20.1.1RQCh. 20 - Prob. 20.1.2RQCh. 20 - Prob. 20.1.3RQCh. 20 - Prob. 20.1.4RQCh. 20 - Prob. 20.1.5RQCh. 20 - Prob. 20.1.6RQCh. 20 - Prob. 20.1.7PACh. 20 - Prob. 20.1.8PACh. 20 - Prob. 20.1.9PACh. 20 - Prob. 20.1.10PA
Ch. 20 - Prob. 20.1.11PACh. 20 - Prob. 20.1.12PACh. 20 - Prob. 20.1.13PACh. 20 - Prob. 20.1.14PACh. 20 - Prob. 20.2.1RQCh. 20 - Prob. 20.2.2RQCh. 20 - Prob. 20.2.3RQCh. 20 - Prob. 20.2.4PACh. 20 - Prob. 20.2.5PACh. 20 - Prob. 20.2.6PACh. 20 - Prob. 20.2.7PACh. 20 - Prob. 20.2.8PACh. 20 - Prob. 20.3.1RQCh. 20 - Prob. 20.3.2RQCh. 20 - Prob. 20.3.3RQCh. 20 - Prob. 20.3.4PACh. 20 - Prob. 20.3.5PACh. 20 - Prob. 20.3.6PACh. 20 - Prob. 20.3.7PACh. 20 - Prob. 20.3.8PACh. 20 - Prob. 20.4.1RQCh. 20 - Prob. 20.4.3RQCh. 20 - Prob. 20.4.4PACh. 20 - Prob. 20.4.5PACh. 20 - Prob. 20.4.6PACh. 20 - Prob. 20.4.7PACh. 20 - Prob. 20.4.9PACh. 20 - Prob. 20.4.10PACh. 20 - Prob. 20.5.1RQCh. 20 - Prob. 20.5.2RQCh. 20 - Prob. 20.5.3PACh. 20 - Prob. 20.5.4PACh. 20 - Prob. 20.5.5PACh. 20 - Prob. 20.5.6PACh. 20 - Prob. 20.5.7PACh. 20 - Prob. 20.5.8PACh. 20 - Prob. 20.6.1RQCh. 20 - Prob. 20.6.2RQCh. 20 - Prob. 20.6.3RQCh. 20 - Prob. 20.6.4RQCh. 20 - Prob. 20.6.5PACh. 20 - Prob. 20.6.6PACh. 20 - Prob. 20.6.7PACh. 20 - Prob. 20.6.8PACh. 20 - Prob. 20.6.9PACh. 20 - Prob. 20.7.1RQCh. 20 - Prob. 20.7.3RQCh. 20 - Prob. 20.7.5RQCh. 20 - Prob. 20.7.6PACh. 20 - Prob. 20.7.8PACh. 20 - Prob. 20.7.9PACh. 20 - Prob. 20.1RDECh. 20 - Prob. 20.5RDECh. 20 - Prob. 20.7RDECh. 20 - Prob. 20.10RDECh. 20 - Prob. 20.11RDECh. 20 - Prob. 20.1CTECh. 20 - Prob. 20.2CTE
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