Which of the following statements is most correct?
A)We can always compute the ex post real interest rate but not the ex ante real rate
B)We cannot compute either the ex post or ex ante real interest rates accurately
C)We can accurately compute the ex ante real interest rate but not the ex post real rate
D)None of the above statements is correct

Question

Quizplus · Accepted Answer

The ex post real interest rate can be computed accurately after the fact using actual inflation data, while the ex ante real interest rate is based on expected inflation and is therefore subject to estimation errors.

Which of the Following Statements Is Most Correct