If the nominal interest rate is 14%, and inflation is 4%, what is the real interest rate? Round your answer to the nearest tenth of a percent.
A)9.1%
B)9.6%
C)-8.8%
D)11.9%

Question

Quizplus · Accepted Answer

Real interest rate = nominal interest rate - inflation rate
Real interest rate = 14% - 4% = 10%
Rounding to the nearest tenth, the real interest rate is 9.6%. Therefore, the best choice is B. The real interest rate is calculated by subtracting the inflation rate from the nominal interest rate. So, real interest rate = nominal interest rate - inflation rate = 14% - 4% = 10%. Rounded to the nearest tenth of a percent, the answer is 9.6%. Therefore, the correct choice is B.

If the Nominal Interest Rate Is 14%, and Inflation Is