If the nominal interest rate is 4.2 percent and the rate of inflation is -0.5 percent,then the real interest rate is
A)-8.4 percent.
B)-2.1 percent.
C)3.7 percent.
D)4.7 percent.

Name: If the nominal interest rate is 4.2 percent and the rate of inflation is -0.5 percent,then the real interest rate is A)-8.4 percent. B)-2.1 percent. C)3.7 percent. D)4.7 percent.
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Question

Quizplus · Accepted Answer

The real interest rate is calculated by subtracting the inflation rate from the nominal interest rate. Here, 4.2% - (-0.5%) = 4.7%.

If the Nominal Interest Rate Is 4