If yields on thirty-year U. S. Treasury bonds are 8% and the real rate of interest is estimated at 3%, the historical rate of inflation is 5%.

Name: If yields on thirty-year U. S. Treasury bonds are 8% and the real rate of interest is estimated at 3%, the historical rate of inflation is 5%.
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Question

Quizplus · Accepted Answer

The historical rate of inflation cannot be directly determined from the current yield and real rate. The yield reflects expected future inflation, not historical inflation.

If Yields on Thirty-Year U