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True or false? - Real interest rates were negative between November of 2017 and November of...

True or false?

- Real interest rates were negative between November of 2017 and November of 2018.

- Real interest rates declined in June of 2018.

(FOR THE UNITED STATES OF AMERICA)

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Answer #2

True : since the real interest rate is calculated as real interest rate = nominal interest rate - inflation rate.

The FED has kept interest rates low since the financial crisis of 2008.

The inflation rate in US in 2017 was 2.1% and in 2018 its 2.5%. Whereas the federal funds rate has been between 1.5% in december 2017 and 2.5% in november 2018 implying a negative real interest rate.

As the federal reserve started to increase interest rate in 2018,and inflation remaining around 2.5%,the real interest rate that was negative is now improving and coming toward zero and may even become positive in coming months.

answered by: anonymous
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