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An investor requires a 3 percent increase in purchasing power in order to induce her to lend. She expects inflation to be 2 percent next
An investor requires a 3 percent increase in purchasing power in order to induce her to lend. She expects inflation to be 2 percent next year. The nominal rate she must charge is about
| 1 percent. | |
| 2 percent. | |
| 3 percent. | |
| 5 percent. | |
| 7 percent. |
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