The two-year interest rate is 11.2% and the expected annual inflation rate is 5.6%. a.What...
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The two-year interest rate is 11.2% and the expected annual inflation rate is 5.6%. a.What is the expected real interest rate? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.) Expected real interest rate b-1. If the expected rate of inflation suddenly rises to 7.6%, what does Fisher's theory say about how the real interest rate will change? O Real rate increases O Real rate decreases Real rate does not change b-2. If the expected rate of inflation suddenly rises to 7.6%, what will be the new nominal rate? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.) Nominal rate
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