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Check My Work (3 remaining) eBook Due to a recession, expected inflation this year is only 2.25%. However, the inflation rate in Year 2 and
Check My Work (3 remaining) eBook Due to a recession, expected inflation this year is only 2.25%. However, the inflation rate in Year 2 and thereafter is expected to be constant at some level above 2.25%. Assume that the expectations theory holds and the real risk-free rate (r) is 1.5%. If the yield on 3-year Treasury bonds equals the 1-year yield plus 2.0%, what inflation rate is expected after Year 17 Round your answer to two decimal places. % Check My Work (3 remaining)
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