If the nominal interest rate is 2.5 percent and the inflation rate is 2 percent,what is the real interest rate?
A).5 percent
B)1.25 percent
C)4.5 percent
D)None of the above is correct.

Name: If the nominal interest rate is 2.5 percent and the inflation rate is 2 percent,what is the real interest rate? A).5 percent B)1.25 percent C)4.5 percent D)None of the above is correct.
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Question

Quizplus · Accepted Answer

The real interest rate is calculated by subtracting the inflation rate from the nominal interest rate: 2.5% - 2% = 0.5%.

If the Nominal Interest Rate Is 2