The ex ante real interest rate is __________, while the ex post real rate is __________.
A) the nominal interest rate minus expected inflation; the nominal interest rate minus actual inflation
B) the nominal interest rate minus actual inflation; the nominal interest rate minus expected inflation
C) the real interest rate plus expected inflation; the real interest rate plus actual inflation
D) the real interest rate plus actual inflation; the real interest rate plus expected inflation

Question

Quizplus · Accepted Answer

The ex ante real interest rate is calculated by subtracting the expected inflation rate from the nominal interest rate, reflecting the anticipated real return on an investment. The ex post real interest rate, on the other hand, is determined by subtracting the actual inflation rate from the nominal interest rate, indicating the actual real return received after the fact.

The Ex Ante Real Interest Rate Is __________, While the Ex