Kaitlin has $10,000 of savings that she may deposit with her local bank. Kaitlin wants to earn

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Kaitlin has $10,000 of savings that she may deposit with her local bank. Kaitlin wants to earn a real rate of return of at least 4 percent, and she is expecting inflation to be exactly 3 percent.

What is the lowest nominal interest rate that Kaitlin would be willing to accept from her local bank?

a. 4 percent

b. 5 percent 

c. 6 percent

d. 7 percent

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Macroeconomics

ISBN: 9781264112456

22nd Edition

Authors: Campbell McConnell, Stanley Brue, Sean Flynn

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