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15. Suppose you know the real five-year real interest rate is 2.5%. You also know that investors expect inflation over the next five years to
15. Suppose you know the real five-year real interest rate is 2.5%. You also know that investors expect inflation over the next five years to average 3%. Inflation over the past five years averaged 1.5%. What is the five-year nominal interest rate (approximately)? a) 2.5% b) 4% c) 5.5% d) 7%
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