Figure 1 in the text shows the estimated real and nominal rates for three-month Treasury bills. Go to httpl/www.martincapitatcomimainichart.htrn and dick on 'Nominal vs. Real Rates," then on 'Nominal vs. Real Market Rates.' a. Compare the three-month real rate to the long-term real rate Which is greater? b. Compare the short-term nominal rate to the long term nominal rate Which appears most volatile?

Figure 1 Real and Nominal Interest Rates (Three-month treasury bill.) 1953-2008

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Interest Rate (%) 16 12 Nominal Rate 1955 pr Estimated Real Rate My ? 1960 1965 1970 1975 1980 1985 1990 1995 2000 2005 2010 Interest Rate (%) 16 12 Nominal Rate 1955 pr Estimated Real Rate My ? 1960 1965 1970 1975 1980 1985 1990 1995 2000 2005 2010

Answer rating: 100% (QA)

When interpreting interest rates it is important to take into consideration the difference between n... View the full answer