If the nominal interest rate is 4 percent and the real interest rate is 7 percent,then the inflation rate is
A)-3 percent.
B)0.75 percent.
C)3 percent.
D)11 percent.

Question

Quizplus · Accepted Answer

The nominal interest rate is the sum of the real interest rate and the inflation rate. If the nominal rate is 4% and the real rate is 7%, the inflation rate must be -3% (4% - 7% = -3%).

If the Nominal Interest Rate Is 4 Percent and the Real