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Pan ! Check Your Understanding. Complete the following 1. Assume that the expected inflation rate was 2% and the nominal interest was 5%, however, actual
Pan ! Check Your Understanding. Complete the following 1. Assume that the expected inflation rate was 2% and the nominal interest was 5%, however, actual inflation turns out to be 4%, Calculate the real interest rate and explain who benefits from this higher than-expected inflation. 2. Explain why the real interest rate can only be calculated in hindsight. Part 2: Practice- Answer the questions regarding nominal interest rate and real interest rate. ssume the nominal interest rate was 5% and inflation was 3%. What was the real interest rate
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