Neco Model Questions Vol1 2020 Economics Question 24
Practice objective / multiple choice question 24 from the 2020 Neco Model Questions Vol1 Economics examination.
In 2020 the Consumer Price Index (CPI) was \(120\) and by 2023 it had risen to \(138\). A government bond pays a nominal annual interest rate of \(10\%\) payable at the end of each year. Assuming inflation follows the CPI change uniformly over the three years, calculate the average real interest rate per annum earned by the bond, using the Fisher approximation \(r \approx i - \pi\). Give your answer to two decimal places as a percentage.
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This is Neco Model Questions Vol1 2020 Economics Question 24. It is one of the objective questions from the 2020 Neco Model Questions Vol1 Economics examination.
Difficulty level: Medium .
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