If real interest is 2 percent and the expected inflation rate is 5 percent,then the nominal interest rate is
A)7 percent.
B)3 percent.
C)2.5 percent.
D)0.4 percent.

Name: If real interest is 2 percent and the expected inflation rate is 5 percent,then the nominal interest rate is A)7 percent. B)3 percent. C)2.5 percent. D)0.4 percent.
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Question

Quizplus · Accepted Answer

Nominal interest rate = Real interest rate + Expected inflation rate 
Nominal interest rate = 2% + 5% 
Nominal interest rate = 7%

If Real Interest Is 2 Percent and the Expected Inflation