Given a nominal interest rate of 7% and an inflation rate of 2.5%,what is the real interest rate?
A)4.4%
B)4.0%
C)7%
D)2.5%
E)9.5%

Name: Given a nominal interest rate of 7% and an inflation rate of 2.5%,what is the real interest rate? A)4.4% B)4.0% C)7% D)2.5% E)9.5%
Brand: Quizplus
Rating: 4.8 (36 reviews)

Question

Quizplus · Accepted Answer

The real interest rate is calculated by subtracting the inflation rate from the nominal interest rate.
Real Interest Rate = Nominal Interest Rate - Inflation Rate
= 7% - 2.5%
= 4.5%
Therefore, the real interest rate is 4.4%, option A.

Given a Nominal Interest Rate of 7% and an Inflation