Question: Suppose 2 - year Treasury bonds yields 4 . 5 % , while 1 - year bonds yields 3 % . r * is 1

Suppose 2-year Treasury bonds yields 4.5%, while 1-year bonds yields 3%. r* is 1%, and the MRP is 0.
a.Using the expectations theory, what is the yield on a 1-year bond, 1 year from Now?
b. What is the expected inflation rate in year 1? Year 2?

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