If the nominal interest rate is 10 percent and inflation is 7 percent, the real interest rate is approximately
A) 1.4 percent.
B) 3 percent.
C) 17 percent.
D) - 3 percent.

Name: If the nominal interest rate is 10 percent and inflation is 7 percent, the real interest rate is approximately A) 1.4 percent. B) 3 percent. C) 17 percent. D) - 3 percent.
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Question

Quizplus · Accepted Answer

The real interest rate is calculated as nominal interest rate minus inflation rate. Therefore, the real interest rate is 10% - 7% = 3%.

If the Nominal Interest Rate Is 10 Percent and Inflation