According to the table, in which year did buyers of six-month Treasury bills receive the highest real return on their investment?O. 1971O. 1972O. 1973O. 1974O. 1975 4. Inflation and interest ratesThe following table shows the average nominal interest rates on six-month Treasury bills between 1971 and 1975, which determined the nominalinterest rate that the U.S. government paid when it issued debt in those years. The table also shows the inflation rate for the years 1971 to 1975. (Allrates are rounded to the nearest tenth of a percent.)Nominal Interest RateInflation RateYear(Percent)(Percent)19714.54.219724.53.319737.26.319748.011.019756.19.1Source: "FRED Economic bata, Federal Reserve Bank of St. Louis, last modifed September 23, 2019, accessed September 24, 2019, https://fred.stiouisfed.org. On the following graph, use the orange points (square symbol) to plot the nominal interest rates for the years 1971 to 1975. Next, use the greenpoints (triangle symbol) to plot the real interest rates for those years.8.07.06.0Nominal Interest Rate5.040Real Interest Rate20101.02030197119721973YEAR197419751976INTEREST RATE (Percent)

Real Rate of Interest = Nominal Rate of Interest - Inflation Rate A real rate of interest is…

Answered: According to the table, in which year…

According to the table, in which year did buyers of six-month Treasury bills receive the highest real return on their investment? O. 1971 O. 1972 O. 1973 O. 1974 O. 1975

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question

According to the table, in which year did buyers of six-month Treasury bills receive the highest real return on their investment?

O. 1971

O. 1972

O. 1973

O. 1974

O. 1975

4. Inflation and interest rates
The following table shows the average nominal interest rates on six-month Treasury bills between 1971 and 1975, 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 1971 to 1975. (All
rates are rounded to the nearest tenth of a percent.)
Nominal Interest Rate
Inflation Rate
Year
(Percent)
(Percent)
1971
4.5
4.2
1972
4.5
3.3
1973
7.2
6.3
1974
8.0
11.0
1975
6.1
9.1
Source: "FRED Economic bata, Federal Reserve Bank of St. Louis, last modifed September 23, 2019, accessed September 24, 2019, https://fred.stiouisfed.org.

Formula Formula ROI (%) = Net Income Principal Amount × 100

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