Short-term U.S.Treasury bills are yielding 0.5%.The expected inflation rate is 2%.Therefore, the real rate of interest must be negative 1.5%.

Name: Short-term U.S.Treasury bills are yielding 0.5%.The expected inflation rate is 2%.Therefore, the real rate of interest must be negative 1.5%.
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Question

Quizplus · Accepted Answer

The real rate of interest is calculated by subtracting the expected inflation rate from the nominal interest rate. In this case, 0.5% - 2% = -1.5%, which means the real rate of interest is negative 1.5%.

Short-Term U