If the nominal interest rate is 8 percent and the real interest rate is 2 percent, what is the inflation rate?
A) 4 percent
B) 6 percent
C) 10 percent
D) 16 percent

Question

Quizplus · Accepted Answer

The formula for calculating the real interest rate is:

Real Interest Rate = Nominal Interest Rate - Inflation Rate

Plugging in the given values, we have:

2% = 8% - Inflation Rate

Solving for the inflation rate, we get:

Inflation Rate = 8% - 2% = 6%

Therefore, the answer is B) 6 percent.

If the Nominal Interest Rate Is 8 Percent and the Real