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4. Inflation and interest rates The following table shows the average nominal interest rates on six-month Treasury bills between 1963 and 1967, which determined the nominal interest rate that the U.S. government paid when it issued debt in those years. The table also shows the inflation rate for the years 1963 to 1967. (All rates are rounded to the nearest tenth of a percent.) Complete the table by calculating the real interest rates for the years 1963 to 1967. Nominal Interest Rate Inflation Rate Real Interest Rate (Percent) (Percent) 3.3 3.7 4.1 5.1 4.6 Year 1963 1964 1965 1966 1967 O 1963 According to the table, in which year did buyers of six-month Treasury bills receive the highest real return on their investment? OOO 1964 O 1965 (Percent) 1.3. 1.3 O 1966 O 1967 1.6 2.9 3.1

4. Inflation and interest rates The following table shows the average nominal interest rates on six-month Treasury bills between 1963 and 1967, which determined the nominal interest rate that the U.S. government paid when it issued debt in those years. The table also shows the inflation rate for the years 1963 to 1967. (All rates are rounded to the nearest tenth of a percent.) Complete the table by calculating the real interest rates for the years 1963 to 1967. Nominal Interest Rate Inflation Rate Real Interest Rate (Percent) (Percent) 3.3 3.7 4.1 5.1 4.6 Year 1963 1964 1965 1966 1967 O 1963 According to the table, in which year did buyers of six-month Treasury bills receive the highest real return on their investment? OOO 1964 O 1965 (Percent) 1.3. 1.3 O 1966 O 1967 1.6 2.9 3.1

ENGR.ECONOMIC ANALYSIS
ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN:9780190931919
Author:NEWNAN
Publisher:NEWNAN
Chapter1: Making Economics Decisions
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**4. Inflation and Interest Rates** The following table shows the average nominal interest rates on six-month Treasury bills between 1963 and 1967, which determined the nominal interest rate that the U.S. government paid when it issued debt in those years. The table also shows the inflation rate for the years 1963 to 1967. (All rates are rounded to the nearest tenth of a percent.) **Complete the table by calculating the real interest rates for the years 1963 to 1967.** | Year | Nominal Interest Rate (Percent) | Inflation Rate (Percent) | Real Interest Rate (Percent) | |------|---------------------------------|--------------------------|------------------------------| | 1963 | 3.3 | 1.3 | | | 1964 | 3.7 | 1.3 | | | 1965 | 4.1 | 1.6 | | | 1966 | 5.1 | 2.9 | | | 1967 | 4.6 | 3.1 | | Calculate the real interest rates by subtracting the inflation rate from the nominal interest rate for each year. **Question:** According to the table, in which year did buyers of six-month Treasury bills receive the highest real return on their investment? - 1963 - 1964 - 1965 - 1966 - 1967
Transcribed Image Text:**4. Inflation and Interest Rates** The following table shows the average nominal interest rates on six-month Treasury bills between 1963 and 1967, which determined the nominal interest rate that the U.S. government paid when it issued debt in those years. The table also shows the inflation rate for the years 1963 to 1967. (All rates are rounded to the nearest tenth of a percent.) **Complete the table by calculating the real interest rates for the years 1963 to 1967.** | Year | Nominal Interest Rate (Percent) | Inflation Rate (Percent) | Real Interest Rate (Percent) | |------|---------------------------------|--------------------------|------------------------------| | 1963 | 3.3 | 1.3 | | | 1964 | 3.7 | 1.3 | | | 1965 | 4.1 | 1.6 | | | 1966 | 5.1 | 2.9 | | | 1967 | 4.6 | 3.1 | | Calculate the real interest rates by subtracting the inflation rate from the nominal interest rate for each year. **Question:** According to the table, in which year did buyers of six-month Treasury bills receive the highest real return on their investment? - 1963 - 1964 - 1965 - 1966 - 1967
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