The Republic of New South? Brazillia, a small, developing island country in South Central America, is experiencing a very high inflation rate at this time. The annual inflation rate is32%.
If the real rate of interest is 1.5?%, what nominal interest rates must the residents of New South Brazillia get to stay ahead of inflation and still have a reward for waiting?
Use the approximate nominal interest rate equation and the true nominal interest rate equation to determine the rates.