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    If the Long-Term Real Interest Rate Is 5
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If the Long-Term Real Interest Rate Is 5

Question 27

Question 27

Multiple Choice

If the long-term real interest rate is 5.1%,the term structure effect is 2.0%,the default-risk premium is 1.7%,and the expected rate of inflation is 3.3%,the short-term nominal interest rate will be


A) -1.9%.
B) 4.7%.
C) 5.5%.
D) 12.1%.

Correct Answer:

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