If the nominal interest rate is 5 percent and the inflation rate is 2 percent, then the real interest rate is 7 percent.

Name: If the nominal interest rate is 5 percent and the inflation rate is 2 percent, then the real interest rate is 7 percent.
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Quizplus · Accepted Answer

The real interest rate is calculated by subtracting the inflation rate from the nominal interest rate, so in this case, it would be 3 percent (5% - 2% = 3%).

If the Nominal Interest Rate Is 5 Percent and the Inflation