Respuesta :
Answer:
The nominal interest rate is 9.00%.
The inflation rate is 7.00%
The real interest rate is 1.87%
Hy's expected inflation rate is 5.00%
Hy's expected real interest rate is 3.81%.
a. Nominal interest Rate:
We find the nominal interest rate as follows:
[tex]Nominal Interest Rate = \frac{(Principal + Interest) - Principal}{Principal}[/tex]
[tex]Nominal Interest Rate = \frac{545 - 500}{500}[/tex]
[tex]Nominal Interest Rate = 0.09[/tex]
b. Inflation Rate
We find the inflation rate as follows:
[tex]Inflation rate = \frac{CPI_{2013} - CPI_{2012}}{CPI_{2012}}[/tex]
[tex]Inflation rate = \frac{214 - 200}{200}}[/tex]
[tex]Inflation rate = 0.07[/tex]
c. Real Interest Rate
Real interest rate is calculated as:
[tex]Real Interest Rate = [\frac{1 + Nominal Interest rate}{1 + Inflation Rate} ] -1[/tex]
[tex]Real Interest Rate = [\frac{1 + 0.09}{1 + 0.07} ] -1[/tex]
[tex]Real Interest Rate = [1.018691589] -1[/tex]
[tex]Real Interest Rate = 0.018691589[/tex]
d. Hy's expected inflation rate
We can compute Hy's expected inflation rate as:
[tex] Expected Inflation rate = \frac{CPI_{expected} - CPI_{2012}}{CPI_{2012}}[/tex]
[tex]Expected Inflation rate = \frac{210 - 200}{200}}[/tex]
[tex]Expected Inflation rate = 0.05[/tex]
e. Expected Real Interest Rate
Hy's expected real interest rate is calculated as:
[tex]Expected Real Interest Rate = [\frac{1 + Nominal Interest rate}{1 + Expected Inflation Rate} ] -1[/tex]
[tex]Expected Real Interest Rate = [\frac{1 + 0.09}{1 + 0.05} ] -1[/tex]
[tex]Expected Real Interest Rate = [1.038095238 ] -1[/tex]
[tex]Expected Real Interest Rate = 0.038095238[/tex]
