If the nominal interest rate is 11 percent and the inflation rate is 9 percent, then the real interest rate is approximately
A)- 2 percent.
B)4 percent.
C)2 percent.
D)20 percent.
E)18 percent.

Question

Quizplus · Accepted Answer

The real interest rate is calculated by subtracting the inflation rate from the nominal interest rate. Therefore, the real interest rate is approximately 2 percent (11 percent nominal interest rate - 9 percent inflation rate = 2 percent real interest rate).

If the Nominal Interest Rate Is 11 Percent and the Inflation