If the annual real rate of interest is 2.5% and the expected inflation rate is 3.7%,the nominal rate of interest would be approximately
A)3.7%.
B)6.2%.
C)2.5%.
D)-1.2%.
E)none of the above.

Name: If the annual real rate of interest is 2.5% and the expected inflation rate is 3.7%,the nominal rate of interest would be approximately A)3.7%. B)6.2%. C)2.5%. D)-1.2%. E)none of the above.
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Question

Quizplus · Accepted Answer

Nominal rate = real rate + expected inflation rate
Nominal rate = 2.5% + 3.7%
Nominal rate = 6.2%

If the Annual Real Rate of Interest Is 2