Multiple Choice
If inflation is anticipated to be 5 per cent during the next year, while the real rate of interest for a one-year loan is 5 per cent, then what should the nominal rate of interest be for a risk-free one-year loan?
A) 5 per cent
B) 10 per cent
C) 25 per cent
D) none of the above
Correct Answer:
Verified
Correct Answer:
Verified
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