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If Inflation Is Anticipated to Be 6 Percent During the Next

Question 36

Multiple Choice

If inflation is anticipated to be 6 percent during the next year, while the real rate of interest for a one-year loan is 5 percent, then what should the nominal rate of interest be for a risk-free one-year loan?


A) 6%
B) 11%
C) 5%
D) 12%

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