Given a real interest rate of 2.5% and an inflation rate of 4.5%,what is the nominal interest rate?
A)2.5%
B)-2.0%
C)2.0%
D)7.1%
E)4.5%

Name: Given a real interest rate of 2.5% and an inflation rate of 4.5%,what is the nominal interest rate? A)2.5% B)-2.0% C)2.0% D)7.1% E)4.5%
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Question

Quizplus · Accepted Answer

The nominal interest rate is calculated by adding the real interest rate and the inflation rate. 
Nominal interest rate = Real interest rate + Inflation rate
= 2.5% + 4.5%
= 7.1%

Given a Real Interest Rate of 2