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The country of Wakanda in East Africa is a closed economy where the velocity of money is constant. Real GDP grows by 5% a year,
The country of Wakanda in East Africa is a closed economy where the velocity of money is constant. Real GDP grows by 5% a year, the money stock grows by 14% per year, and the population grows by 2% per year. The savings rate is 20%, depreciation is 4%, and the nominal interest rate is 11%. What is the real interest rate?
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