The two-year interest rate is 11.4% and the expected annual inflation rate is 5.7%.
a.What is the expected real interest rate? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.)
Expected real interest rate: %
b. If the expected rate of inflation suddenly rises to 7.7%, what will be the new nominal rate? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.)
Nominal rate: %