If the nominal interest rate is 10 percent and the rate of inflation is 2 percent, what is the real interest rate?
A) 5 percent
B) 8 percent
C) 10 percent
D) 12 percent

Question

Quizplus · Accepted Answer

The real interest rate is calculated by subtracting the rate of inflation from the nominal interest rate. In this case, the real interest rate would be 8 percent (10 percent - 2 percent).

If the Nominal Interest Rate Is 10 Percent and the Rate