What is the real interest rate if the nominal interest rate is 9 percent and the expected inflation rate is 4 percent?
A) 13 percent
B) −5 percent
C) 9 percent
D) −13 percent
E) 5 percent

Question

Quizplus · Accepted Answer

The real interest rate is calculated as the nominal interest rate minus the expected inflation rate. Therefore, the real interest rate is equal to 9 percent minus 4 percent, which is equal to 5 percent. Therefore, the best choice is E.

What Is the Real Interest Rate If the Nominal Interest