Answer:
Explanation:
[tex]According \ to \ Fischer's \ exact \ formula[/tex]
[tex]r = \dfrac{i-e}{1+e}[/tex]
[tex]here; \\ \\ real \ interest \ rate \ (r) \ = ??? \\ \\ inflation \ rate \ (e) \ = 2.5%[/tex]
[tex]nominal \ interest \ rate \ (i) = 8%[/tex]
[tex]r = \dfrac{0.08-0.025}{1+0.025}[/tex]
[tex]r = \dfrac{0.055}{1.025}[/tex]
[tex]r = 0.0537 \\ \\ r = 5.37 \%[/tex]
[tex]According \ to \ Fischer's \ approximation \ formula: \\ \\ r = i- e \\ \\ r = (8 -2.5) \% \\ \\ r= 5.5 \%[/tex]
