If the nominal interest rate is 7 percent and the inflation rate is 1 percent, the real interest rate is approximately
A) 7 percent.
B) 6 percent.
C) 8 percent.
D) -6 percent.

Name: If the nominal interest rate is 7 percent and the inflation rate is 1 percent, the real interest rate is approximately A) 7 percent. B) 6 percent. C) 8 percent. D) -6 percent.
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Question

Quizplus · Accepted Answer

The real interest rate can be approximated by subtracting the inflation rate from the nominal interest rate, so 7% - 1% = 6%.

If the Nominal Interest Rate Is 7 Percent and the Inflation