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Inflation and interest rates The following table gives the average nominal interest rates on six-month Treasury bills spanning the years 2014 and 2018, which determined
Inflation and interest rates The following table gives the average nominal interest rates on six-month Treasury bills spanning the years 2014 and 2018, which determined the nominal interest rate paid by the U.S. government when it issued debt in that time period. The table also gives the inflation rate for the years 2014 to 2018. (All rates rounded to the nearest 0.1 percent.) Year Nominal Interest Rate Inflation Rate (Percent) (Percent) 2014 0.1 1.6 2015 0.2 0.1 2016 0.5 1.3 2017 1.1 2.1 2018 2.1 2.4 Source: "FRED Economic Data," Federal Reserve Bank of St. Louis, last modified September 23, 2019, accessed September 24, 2019, https://fred.stlouisfed.org. On the following graph, use the orange points (square symbol) to plot the nominal interest rates for the years 2014 to 2018. Next, use the green points (triangle symbol) to plot the real interest rates for those years. Nominal Interest Rate Real Interest Rate 2013 2014 2015 2016 2017 2018 2019 3.0 2.0 1.0 0 -1.0 -2.0 INTEREST RATE (Percent) YEAR According to the table, in which year did buyers of six-month Treasury bills receive the highest real return on their investment? 2014 2015 2016 2017 2018
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