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Answer to Question #4602 in Macroeconomics for Jessica Richardson

Question #4602
5. Assume that the velocity of money is constant. Real GDP grows by 5% per year and the money stock grows by 14% per year. If the nominal interest rate is 11% what is the real interest rate?
Expert's answer
Real interest rate = %GDP %nominal rate / %money stock = 5% 11% / 14% =
3.92%

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