Hy Marks buys a one-year government bond on January 1, 2022, for $500.00. He receives principal plus interest totaling $625.00 on January 1, 2023. Suppose that the CPI is 200.0 on January 1, 2022, and 205.0 on January 1, 2023. This increase in prices is different than Hy had anticipated; his guess was that the CPI would be beginning of 2023. The nominal interest rate is 5%. (Enter your answer as a percentage rounded to one decimal place.) The actual inflation rate is 2.5 %. (Enter your answer as a percentage rounded to one decimal place.) The real interest rate is 2.5 %. (Enter your answer as a percentage rounded to one decimal place.) Hy's expected inflation rate was %. (Enter your answer as a percentage rounded to one decimal place.)
Hy Marks buys a one-year government bond on January 1, 2022, for $500.00. He receives principal plus interest totaling $625.00 on January 1, 2023. Suppose that the CPI is 200.0 on January 1, 2022, and 205.0 on January 1, 2023. This increase in prices is different than Hy had anticipated; his guess was that the CPI would be beginning of 2023. The nominal interest rate is 5%. (Enter your answer as a percentage rounded to one decimal place.) The actual inflation rate is 2.5 %. (Enter your answer as a percentage rounded to one decimal place.) The real interest rate is 2.5 %. (Enter your answer as a percentage rounded to one decimal place.) Hy's expected inflation rate was %. (Enter your answer as a percentage rounded to one decimal place.)
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Transcribed Image Text:Can you please solve the expected
inflation rate part?"
Hy Marks buys a one-year government bond on January 1, 2022, for $500.00. He receives principal plus interest totaling $525.00 on January 1, 2023.
Suppose that the CPI is 200.0 on January 1, 2022, and 205.0 on January 1, 2023. This increase in prices is different than Hy had anticipated; his guess was that the CPI would be
beginning of 2023.
The nominal interest rate is 5 %. (Enter your answer as a percentage rounded to one decimal place.)
The actual inflation rate is 2.5 %. (Enter your answer as a percentage rounded to one decimal place.)
The real interest rate is 2.5 %. (Enter your answer as a percentage rounded to one decimal place.)
Hy's expected inflation rate was %. (Enter your answer as a percentage rounded to one decimal place.)
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