1. State the conditions under which the market interest is (a) higher than, (b) lower than, and (c) the same as the real interest rate.

2. Calculate the inflation-adjusted interest rate when the annualized inflation rate is 27% per year (Caracas, 2004) and the real interest rate is 4% per year.

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3. What annual inflation rate is implied from a market interest rate of 15% per year when the real interest rate is 4% per year?

1. What market interest rate per quarter would be associated with a quarterly inflation rate of 5% and a real interest rate of 2% per quarter?

2. When the market interest rate is 48 % per year, compounded monthly (due to hyperinflation), what is the monthly inflation rate if the real interest rate is 6% per year, compounded monthly?

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