Neco Model Questions Vol1 2021 Economics Question 46
Practice objective / multiple choice question 46 from the 2021 Neco Model Questions Vol1 Economics examination.
The consumer price index (CPI) was 120 in 2020 and rose to 126 in 2021. A 2‑year government bond offers a nominal interest rate of 12 % per annum, compounded annually. (a) Calculate the real rate of return for each of the two years and the overall real return over the 2‑year period. (b) If inflation in the second year were such that the overall real return on the bond equals 5 %, what would be the CPI at the end of 2022? Give your answer to one decimal place.
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About This Question
This is Neco Model Questions Vol1 2021 Economics Question 46. It is one of the objective questions from the 2021 Neco Model Questions Vol1 Economics examination.
Difficulty level: Medium .
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