Final answer:
The nominal interest rate for a 3 month Treasury bill, with a real interest rate of 2.00% and expected inflation of 1.80%, is 3.80%.
Step-by-step explanation:
To determine the inflation rate for a 3 month Treasury bill when the real rate of interest is given as 2.00% and the expected inflation is 1.80%, we can use the formula:
Real interest rate = Nominal interest rate - Inflation rat
Rearranging the formula to solve for the nominal interest rate gives us:
Nominal interest rate = Real interest rate + Inflation rate
So, if the real interest rate is 2.00%, and the expected inflation is 1.80%, the nominal interest rate for the Treasury bill would be calculated as follows:
Nominal interest rate = 2.00% + 1.80% = 3.80%
Therefore, the nominal interest rate for a 3 month Treasury bill, given the expected inflation rate, would be 3.80%.