If the nominal interest rate per year is 10 percent and the inflation rate is 4 percent, what is the real rate of interest?
A)10.0 percent
B)4.1 percent
C)5.8 percent
D)14.0 percent

Name: If the nominal interest rate per year is 10 percent and the inflation rate is 4 percent, what is the real rate of interest? A)10.0 percent B)4.1 percent C)5.8 percent D)14.0 percent
Brand: Quizplus
Rating: 4.8 (44 reviews)

Question

Quizplus · Accepted Answer

The real rate of interest is calculated as nominal rate of interest - inflation rate. Therefore, real rate of interest = 10% - 4% = 6%.

If the Nominal Interest Rate Per Year Is 10 Percent