1). The expected real interest rate is 2.9%, real inflation during the last year was 2.9% and the nominal interest rate is currently 1.5%. According to Fisher's equation, what is the expected inflation (in %) over the next year, dPe?

2). The expected real interest rate is 5.2%, real inflation during the last year was 5.6%, and expected inflation for next year is -1.3%. What is the current level of nominal interest rates (in %) that the Fisher equation predicts? 

3). You expect inflation over the next year to be -0.8%. Real inflation last year was 3.7% and the current nominal interest rate is 7.3%. What is your expected real interest rate (in %)?

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According to Fishers equation the nominal interest rate i is equal to the sum of the expected real i... View the full answer