If the nominal interest rate is 5 percent and the rate of inflation is -2.5 percent,then the real interest rate is
A)-7.5 percent.
B)-2.5 percent.
C)2.5 percent.
D)7.5 percent.

Name: If the nominal interest rate is 5 percent and the rate of inflation is -2.5 percent,then the real interest rate is A)-7.5 percent. B)-2.5 percent. C)2.5 percent. D)7.5 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, 5% - (-2.5%) = 7.5%.

If the Nominal Interest Rate Is 5 Percent and the Rate