Suppose the expected annual inflation rates in each of the next 3 years are as follows: Year
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Suppose the expected annual inflation rates in each of the next 3 years are as follows: Year 1: 1.5%, Year 2: 2.3%, Year 3: 3.4%. Based on the Expectations Theory of the term structure of interest rates, what is IP3; That is, the expected average inflation rate for year 3?
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