4. Inflation and interest rates The following table shows the average nominal interest rates on six-month Treasury bills between 1963 and 1967, which determined the nominal interest rate that the U.S. government paid when it issued debt in those years. The table also shows the inflation rate for the years 1963 to 1967. (All rates are rounded to the nearest tenth of a percent.) Complete the table by calculating the real interest rates for the years 1963 to 1967. Nominal Interest Rate Inflation Rate Real Interest Rate (Percent) (Percent) 3.3 3.7 4.1 5.1 4.6 Year 1963 1964 1965 1966 1967 O 1963 According to the table, in which year did buyers of six-month Treasury bills receive the highest real return on their investment? OOO 1964 O 1965 (Percent) 1.3. 1.3 O 1966 O 1967 1.6 2.9 3.1
4. Inflation and interest rates The following table shows the average nominal interest rates on six-month Treasury bills between 1963 and 1967, which determined the nominal interest rate that the U.S. government paid when it issued debt in those years. The table also shows the inflation rate for the years 1963 to 1967. (All rates are rounded to the nearest tenth of a percent.) Complete the table by calculating the real interest rates for the years 1963 to 1967. Nominal Interest Rate Inflation Rate Real Interest Rate (Percent) (Percent) 3.3 3.7 4.1 5.1 4.6 Year 1963 1964 1965 1966 1967 O 1963 According to the table, in which year did buyers of six-month Treasury bills receive the highest real return on their investment? OOO 1964 O 1965 (Percent) 1.3. 1.3 O 1966 O 1967 1.6 2.9 3.1
Chapter18: Introduction To Macroeconomics: Unemployment, Inflation, And Economic Fluctuations
Section: Chapter Questions
Problem 13P
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Transcribed Image Text:4. Inflation and interest rates
The following table shows the average nominal interest rates on six-month Treasury bills between 1963 and 1967, which determined the nominal interest
rate that the U.S. government paid when it issued debt in those years. The table also shows the inflation rate for the years 1963 to 1967. (All rates are
rounded to the nearest tenth of a percent.)
Complete the table by calculating the real interest rates for the years 1963 to 1967.
Inflation Rate Real Interest Rate
(Percent)
Year
1963
1964
1965
1966
1967
Nominal Interest Rate
(Percent)
3.3
3.7
O 1963
O 1964
O 1965
O 1966
4.1
O 1967
5.1
4.6
According to the table, in which year did buyers of six-month Treasury bills receive the highest real return on their investment?
(Percent)
1.3
1.3
1.6
2.9
3.1
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