letter c

2020 2025 Nominal GDP 20,900 26,500 Real GDP (2012 dollars) 18,400 21,200 (c) The CBO is also forecasting that the nominal interest rate on 10-year government bonds will be 1.5 percent over this period. Given your previous answer, what does that imply about the average real interest rate on the bonds? (a) Turkey, like many developing countries, has relatively high inflation by US stan- dards - about 10 percent per year over the past decade. If a typical apartment in Ankara costs around 1,500 Turkish lira to rent today, what would you guess was the rent 10 years ago? (b) The table below shows the Congressional Budget Office's current forecasts for real and nominal GDP over the next five years. Based on this table, how much total inflation is the CBO expecting over this period? What is the average annual inflation rate the CBO is expecting? 2020 2025 Nominal GDP 20,900 26,500 Real GDP (2012 dollars) 18,400 21,200 (c) The CBO is also forecasting that the nominal interest rate on 10-year government bonds will be 1.5 percent over this period. Given your previous answer, what does that imply about the average real interest rate on the bonds