The two-year interest rate is 10% and the expected annual inflation rate is 5%.
a. what is the expected real interest rate?

In economics, the Fisher equation is used to determine the relationship of the nominal interest rate and the real interest rate. This equation takes into account the effect of inflation. Mathematically this is expressed as:

Real rate =  -1

The values given are:

Nominal rate= 10% = 0.1

Inflation=5%=0.05

Substituting known values and by calculation:

Real rate=0.0476 = 4.76%

answer; ///pegged exchange rate with the united states;

answer///the factor market;