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Answer :
After the key interest rate was raised in Zimbabwe, the nominal interest rate was 70%, and the real interest rate can be calculated based on additional information.
The World View states that Zimbabwe's central bank raised its key interest rate from 50% to 70%. Therefore, the nominal interest rate after the increase is 70%. However, to determine the real interest rate, we need more information. The real interest rate takes into account the inflation rate and reflects the purchasing power of money. Given that the inflation rate in Zimbabwe was running at approximately 200% per year, the real interest rate can be calculated by subtracting the inflation rate from the nominal interest rate.
To calculate the real interest rate, we subtract the inflation rate of 200% from the nominal interest rate of 70%.
- Real interest rate = Nominal interest rate - Inflation rate
- Real interest rate = 70% - 200%
Since the inflation rate is higher than the nominal interest rate, the resulting real interest rate would be negative. However, it's important to note that the calculation assumes a simple subtraction of the inflation rate from the nominal interest rate. In reality, calculating the real interest rate is more complex and involves considering various economic factors and time periods.
Therefore, without more detailed information, it is not possible to provide an accurate estimate of the real interest rate in Zimbabwe after the key interest rate was raised to 70%.
Learn more about interest here:
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