During a certain year, the nominal interest rate was 7 percent, the real interest rate was 4 percent, and the cpi was 198.3 at the end of the year. the cpi at the beginning of the year was a.
159.2.

b.
168.3.

c.
185.5.

d.
196.1

CPI at the beginning of the year = 192.52

Explanation:

given data

nominal interest rate = 7 percent

real interest rate = 4 percent

CPI = 198.3

to find out

CPI at the beginning of the year

solution

we know that according to fisher equation

1 + r =    ....................1

and for smaller values is equivalent to r

r = n - i           .....................2

here r is real interest rate and n is nominal interest rate and i is inflation rate

so from equation 2

4 = 7 - inflation rate

inflation rate = 3 percent

so

Rate of inflation = (CPI at the end of the year - CPI at the beginning of the year) × 100 ÷ CPI at the beginning of the year

put here value

3% = (198.3 - CPI at the beginning of the year) × 100 ÷  CPI at the beginning of the year

CPI at the beginning of the year =

CPI at the beginning of the year = 192.52

i believe it’s b because the rest don’t make sense

answer; (inseparability);