Multiple Choice
Early in the 1980s, nominal interest rates on mortgages hovered in the 13 percent range even while inflation fell to the 5 percent range. Given the expectation that the Fed would keep inflation at 5 percent, a reasonable estimate of the real rate of interest would be
A) 4 percent.
B) 5 percent.
C) 8 percent.
D) 13 percent.
E) 18 percent.
Correct Answer:
Verified
Correct Answer:
Verified
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