The long-term expected real interest rate is the long-term nominal interest rate ________.
A) minus the long-term expected inflation rate
B) plus the long-term expected inflation rate
C) divided by the long-term expected inflation rate
D) multiplied by the long-term expected inflation rate

Question

Quizplus · Accepted Answer

The long-term expected real interest rate represents the rate of return an investor will receive on a loan or investment adjusted for inflation. Therefore, it is calculated by subtracting the long-term expected inflation rate from the long-term nominal interest rate.

The Long-Term Expected Real Interest Rate Is the Long-Term Nominal