If the expected inflation rate is 5% and the real required return is 6%, then the Fisher equation says that the nominal interest rate should be exactly ______.

Question

Quizplus · Accepted Answer

According to the Fisher equation, nominal interest rate = real interest rate + expected inflation rate. Thus, nominal interest rate = 6% + 5% = 11%. Therefore, the best choice is D, 11.3% is not an option.

If the Expected Inflation Rate Is 5% and the Real