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Given her evaluation of current economic conditions, Ima Nutt believes there is a 20 percent probability of recession, a 50 percent chance of continued steady
Given her evaluation of current economic conditions, Ima Nutt believes there is a 20 percent probability of recession, a 50 percent chance of continued steady growth, and a 30 percent probability of inflationary growth. For each possibility, Ima has developed an interest rate forecast for long-term Treasury bond interest rates: ECONOMIC INTEREST RATE FORECAST FORECAST Recession 6 percent Constant growth 9 percent Inflation 14 percent a. What is the expected interest rate under Ima
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