If the money interest rate is 7 percent and the inflationary premium 4 percent, the real interest rate is
A)-3 percent.
B)3 percent.
C)4 percent.
D)7 percent.

Name: If the money interest rate is 7 percent and the inflationary premium 4 percent, the real interest rate is A)-3 percent. B)3 percent. C)4 percent. D)7 percent.
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Question

Quizplus · Accepted Answer

The real interest rate is calculated by subtracting the inflationary premium from the nominal interest rate: 7% - 4% = 3%.

If the Money Interest Rate Is 7 Percent and the Inflationary