Question

If the real interest rate is 3.00% per year and the expected inflation rate is 2.40%, what is the nominal interest rate according to the Fisher equation

Answer 1

5.47%

Step-by-step explanation:

Fisher equation:

1+ real interest rate = (1+nominal interest rate) / (1+Inflation rate)

1+0.03 = (1 + Nominal interest rate) / (1+0.024)

--> nominal interest rate = 5.47%