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    Exam 30: IS-MP Analysis: Interest Rates and Output
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    If the Nominal Rate of Interest Is 4
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If the Nominal Rate of Interest Is 4

Question 21

Question 21

Multiple Choice

If the nominal rate of interest is 4.5%, the rate of inflation is 2%, and the risk premium is 1.5%, the risk-free rate is:


A) 3.5%.
B) 1.5%.
C) 2.5%.
D) 1%.

Correct Answer:

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