If the nominal rate of interest is 13.57% and the real rate of interest is 7.53%,...

If the nominal rate of interest is 13.57% and the real rate of interest is 7.53%, what is the expected rate of inflation

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Expert Solution

Approximate rate of inflation can be calculated as =Nominal rate-real rate =13.57%-7.53% =6.04%

Accurate rate can be calculated as (1+nominal rate)=(1+real rate)*(1+inflation rate) =(1+13.57%)/(1+7.53%)-1 =5.62%

jeff jeffy answered 2 years ago

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