If the nominal interest rate is 3 percent and the inflation rate is 4 percent,then the real interest rate is
A)7 percent.
B)-1 percent.
C)3 percent.
D)4 percent.

Name: If the nominal interest rate is 3 percent and the inflation rate is 4 percent,then the real interest rate is A)7 percent. B)-1 percent. C)3 percent. D)4 percent.
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Question

Quizplus · Accepted Answer

Real interest rate = nominal interest rate - inflation rate
Real interest rate = 3% - 4%
Real interest rate = -1%

Therefore, the real interest rate is -1%.

If the Nominal Interest Rate Is 3 Percent and the Inflation