8. Real and nominal interest rates: Suppose the real return on investing in a machine is 5% and the inflation rate is 4%. (a) According
8. Real and nominal interest rates: Suppose the real return on investing in a machine is 5% and the inflation rate is 4%. (a) According to the Fisher equation, what should the nominal interest rate be? (b) Suppose bank A charges a nominal interest rate on loans equal to 8%. What happens? (c) Suppose bank B advertises its nominal rate on savings accounts as 12%. What happens
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