Suppose the interest rate that banks in Techland charge one another for overnight loans is 5 percent,the long-term nominal interest rate is 4.5 percent,and the long-term expected inflation rate is 3 percent.
a)What is the long-term expected real interest rate?
b)How will the long-term expected real interest rate be affected if the central bank of Techland starts purchasing government bonds from banks?

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The Answer of Suppose the interest rate that banks in Techland charge one another for overnight loans is 5 percent,the long-term nominal interest rate is 4.5 percent,and the long-term expected inflation rate is 3 percent.
a)What is the long-term expected real interest rate?
b)How will the long-term expected real interest rate be affected if the central bank of Techland starts purchasing government bonds from banks?

Suppose the Interest Rate That Banks in Techland Charge One