question archive Treasury bills are currently paying 6 percent and the inflation rate is 3
Treasury bills are currently paying 6 percent and the inflation rate is 3
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Treasury bills are currently paying 6 percent and the inflation rate is 3.3 percent.
What is the approximate real rate of interest? (Enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) Approximate real rate %
What is the exact real rate? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) Exact real rate %
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Answer:
Approx Real Rate = Treasury bill rate - Inflation = 6% - 3.3% = 2.7%
Exact Real rate = ( 1 + T Bill rate) / ( 1 + inflation) - 1 = 1.06 / 1.033 - 1 = 2.61%
