The following table gives the average nominal interest rates on six-month Treasury bills spanning the years 1997 and 2001, which determined the nominal interest rate paid by the U.S. government when it issued debt in that time period. The table also gives the inflation rate for the years 1997 2001. (All rates rounded to the nearest 0.1 percent.) Year 1997 1998 1999 2000 2001 Nominal Interest Rate (Percent) 5.2 4.8 4.8 5.9 3.4 Inflation Rate (Percent) 2.3 1.5 2.2 3.4 2.8 Source: "FRED Economic Data Federal Reserve Bank of St. Louis, last modified September 23, 2015, accessed September 24, 2019, hep//fred.stiouisfed.org.

ENGR.ECONOMIC ANALYSIS
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ISBN:9780190931919
Author:NEWNAN
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Chapter1: Making Economics Decisions
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On the following graph, use the orange points (square symbol) to plot the nominal interest rates for the years 1997 to 2001. Next, use the green
points (triangle symbol) to plot the real interest rates for those years.
60
5.0
INTEREST RATE (Percent)
6
40
3.0
10
0
1996
O 1997
1998
O 1999
2000
1997
O 2001
1996
1990
YEAR
2000 2001
2002
Nominal Interest Rate
According to the table, in which year did buyers of six-month Treasury bills receive the highest real return on their investment?
A
Real Interest Rate
?
Transcribed Image Text:On the following graph, use the orange points (square symbol) to plot the nominal interest rates for the years 1997 to 2001. Next, use the green points (triangle symbol) to plot the real interest rates for those years. 60 5.0 INTEREST RATE (Percent) 6 40 3.0 10 0 1996 O 1997 1998 O 1999 2000 1997 O 2001 1996 1990 YEAR 2000 2001 2002 Nominal Interest Rate According to the table, in which year did buyers of six-month Treasury bills receive the highest real return on their investment? A Real Interest Rate ?
4. Inflation and interest rates
The following table gives the average nominal interest rates on six-month Treasury bills spanning the years 1997 and 2001, which determined the
nominal interest rate paid by the U.S. government when it issued debt in that time period. The table also gives the inflation rate for the years 1997 to
2001. (All rates rounded to the nearest 0.1 percent.)
Year
1997
1998
1999
2000
2001
Nominal Interest Rate
(Percent)
5.2
4.8
4.8
5.9
3.4
Inflation Rate
(Percent)
2.3
1.5
2.2
3.4
2.8
Source: "FRED Economic Data Federal Reserve Bank of St. Louis, last modified September 23, 2015, accessed September 24, 2019, he//fred.stiouisfed.org.
Transcribed Image Text:4. Inflation and interest rates The following table gives the average nominal interest rates on six-month Treasury bills spanning the years 1997 and 2001, which determined the nominal interest rate paid by the U.S. government when it issued debt in that time period. The table also gives the inflation rate for the years 1997 to 2001. (All rates rounded to the nearest 0.1 percent.) Year 1997 1998 1999 2000 2001 Nominal Interest Rate (Percent) 5.2 4.8 4.8 5.9 3.4 Inflation Rate (Percent) 2.3 1.5 2.2 3.4 2.8 Source: "FRED Economic Data Federal Reserve Bank of St. Louis, last modified September 23, 2015, accessed September 24, 2019, he//fred.stiouisfed.org.
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