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£https://revel.pearson.com/#/courses/5b0770d4e4b0afc7a9c058bf/union/performance Search PEARSON Practice: Section 9.6 Score: 3 of 6 pts 4 or 6 Question 4: Nominal versus Real Interest Rates 7 Question Help Settings Real-Time Data Analysis Exercise* In Apil 2017, the nominal interest rate on the one-year Treasury bill was 101 percent. Fro you bought the one-year Treasury bill in April 2017, the interest rate you earn places and include a minus sign if necessary.) m Apri 2017 to April 2018, the consumer price index rose from 244.1 to 250 0. I ed yer the follo ing 12-month penod was %, enerio rans erounde a ho decimal Real-time data provided by Federal Reserve Economic Data (FRED), Federal Reserve Bank of Saint Louis nter your answer in the answer box and then click Check Answer

Explanation / Answer

The inflation rate in the period from April 2017 to April 2018 would be: (250 - 244.1) / 244.1 = 0.0241 = 2.41%

The nominal interest rate I earned over the 12 month period = 1.01%

The real interest rate I earned over the 12 month period = 1.01% - 2.41% = -1.4%

Hence I earned -1.4% real interest rate over the 12 month period.

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