Answer:
Inflation rate = 2.40%
Explanation:
One of the factors that affects interest rate is the inflation rate. The fishers equation gives the relationship between inflation rate, real interest rate and nominal interest rate.
The relationship is given as follows:
(1 + N ) = (1 + r ) (1 + f)
n- nominal interest rate , r - real interest rate , inflation rate
f = ((1 + N )/(1 + r )) - 1
= (1.11/ 1.084) -1
= 0.02398524 × 100
= 2.40%
Inflation rate = 2.40%
