5. The short-term nominal interest rate is 5%, with an expected inflation of 2%. Economists forecast that

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5. The short-term nominal interest rate is 5%, with an expected inflation of 2%. Economists forecast that next year’s nominal rate will increase by 100 basis points, but inflation will fall to 1.5%. What is the expected change in real interest rates?

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Financial Markets And Institutions

ISBN: 9780134519265

9th Edition

Authors: Frederic S. Mishkin, Stanley G. Eakins

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