Question: You read in BusinessWeek that a panel of economists has
You read in BusinessWeek that a panel of economists has estimated that the long-run real growth rate of the U.S. economy over the next five-year period will average 3 percent. In addition, a bank newsletter estimates that the average annual rate of inflation during this five-year period will be about 4 percent. What nominal rate of return would you expect on U.S. government T-bills during this period?
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