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7 . Inflation and interest rates The following table shows the average nominal interest rates on six-month Treasury bills between 2004 and 2008, which determined

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7 . Inflation and interest rates 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.) Nominal Interest Rate Inflation Rate Year (Percent) (Percent) 2004 1.6 2.7 2005 3.4 3.4 2006 4.8 3.2 2007 4.4 2.9 2008 1.6 3.8 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. 5.0 -O 4.0 Nominal Interest Rate 3.0 A 2.0 Real Interest Rate INTEREST RATE (Percent) 1.0 0 -1.0 2.0 -3.0 2003 2004 2005 2006 2007 2008 2009 YEARAccording to the table, in which year did buyers of sixmonth Treasury bills receive the highest real return on their investment? C) 2004 C) 2005 C) 2006 C) 2007 C) 2008

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