If the real rate of interest in a country is 4 percent and annual inflation is expected to be 9 percent,the nominal interest rate will be _____ percent.

Question

Quizplus · Accepted Answer

The Fisher effect states that a country's "nominal" interest rate (i)is the sum of the required "real" rate of interest (r)and the expected rate of inflation over the period for which the funds are to be lent (I).i = r + I,ie. ,4% + 9% = 13%

If the Real Rate of Interest in a Country Is