If the nominal interest rate is 7.5 percent and the inflation rate is 4.0 percent, what is the real interest rate?
A)4.0 percent
B)9.5 percent
C)3.4 percent
D)11.5 percent

Question

Quizplus · Accepted Answer

The real interest rate is calculated by subtracting the inflation rate from the nominal interest rate. In this case, 7.5% - 4.0% = 3.5%, which is the real interest rate. Therefore, the correct answer is option C.

If the Nominal Interest Rate Is 7