Suppose that the nominal rate of interest is 7% and the inflation rate is 3%. The real rate of interest is _____%.
A) 3
B) 4
C) 10
D) 7

Name: Suppose that the nominal rate of interest is 7% and the inflation rate is 3%. The real rate of interest is _____%. A) 3 B) 4 C) 10 D) 7
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Question

Quizplus · Accepted Answer

The real rate of interest is calculated as nominal interest rate minus inflation rate. 
Real Rate = Nominal Rate - Inflation Rate
Real Rate = 7% - 3% 
Real Rate = 4% 
Therefore, the real rate of interest is 4%.

Suppose That the Nominal Rate of Interest Is 7% and the Inflation