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please do not use handwriting or pictures Q3. If the expected inflation rate is 10 percent and the real rate of interest is 4 percent:

please do not use handwriting or pictures

Q3. If the expected inflation rate is 10 percent and the real rate of interest is 4 percent:

  1. Compute the nominal rate of interest. (Hint: use equation 2.1) (0.5 mark)
  2. Briefly differentiate between the nominal and the real rates of interest. (0.5 mark)

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