The real interest rate is 4 percent and the nominal interest rate is 6 percent.Is there inflation or deflation? What is the inflation or deflation rate?
A)deflation;2 percent
B)deflation;10 percent
C)inflation;2 percent
D)inflation;10 percent

Question

Quizplus · Accepted Answer

The real interest rate is the nominal interest rate minus the inflation rate. Here, 6% (nominal) - 4% (real) = 2% inflation.

The Real Interest Rate Is 4 Percent and the Nominal