You are considering purchasing a car, and you are offered a loan with a nominal interest rate of 4%. Assume inflation is expected to average 1% over the life of the loan. What is the real interest rate? %The Fisher Effect equation can be used to determine the real interest rate. Use this equation to determine the answer to the question. If the nominal interest rate is 0.050, and the inflation rate is 0.025, what is the real interest rate? Indeterminate. The real interest rate and the inflation rate are completely unrelated. 1.024 0.075 O -0.025 O-0.02381 0.025There is a persistent fear that there will be a high level of deflation. Many economists warn that it may be worse for the economy than if there is high inflation. Suppose that Herb is in debt and has to pay a 4.50% nominal interest rate. He expected inflation to be 1.50%. Instead, inflation is -1.00% (deflation) What is the real interest rate that Herb expected to pay? Round your answer to two decimal places. % What is the real interest rate that Herb is actually paying? Round your answer to two decimal places. Because the economy is experiencing deflation of -1:00% instead of inflation of 1.50%, Herb's real interest rate, compared to what he expected to pay. has decreased, so Herb feels richer. increased, so Herb feels poorer. decreased, so Herb feels poorer. increased, so Herb feels richer