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(a) Define real interest rate. How is it related to nominal interest rate? (b) Suppose the expected annual inflation rate in the U.S. is 1.5%

(a) Define real interest rate. How is it related to nominal interest rate?

(b) Suppose the expected annual inflation rate in the U.S. is 1.5% and current nominal interest rate is 2%, what is the approximate real interest rate? What is the actual real interest rate?

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