Question

An investor requires a 3 percent increase in purchasing power in order to induce her to lend. She expects inflation to be 2 percent next year. The nominal rate she must charge is about:_______.

A.1%
B. 2%
C. 3%
D. 5%
E. 7%

Answer 1

The correct answer will be D. 5%

Step-by-step explanation: