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Q. Relation between nominal and real interest rate?
Relation between nominal interest rate, real interest rate and inflation
If we signify the nominal interest rate by R, real rate by r and expected inflation by pe then real interest rate is defined by:
r = R-pe or R=r+pe
Suppose that the reserve requirement is 10 percent and the balance sheet of the People's National Bank looks like the accompanying example. a. What are the required reseves of P
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