Approximate nominal rate of interest required

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Reference no: EM13910839

A saver will lend her money to someone else if she she gets a return of 4% per year for not having use of her funds. She also thinks that prices will increase by 2% per year during the time of the loan. Which statement(s) below is/are true.

I. 4% is the desired real rate of interest

II. 6% is the approximate nominal rate of interest required

III. 2% is the expected inflation rate over the period

Reference no: EM13910839

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