Assume a nominal interest rate on one-year U.S.Treasury Bills of 5.30% and a real rate of interest of 1.50%.Using the Fisher Effect Equation,what is the approximate expected rate of inflation in the U.S.over the next year?

Question

Quizplus · Accepted Answer

According to the Fisher Effect Equation, expected inflation rate = nominal rate - real rate. Here, expected inflation rate = 5.3% - 1.5% = 3.8%. Therefore, the best choice is C) 3.80%.

Assume a Nominal Interest Rate on One-Year U