Suppose the consumer price index was 184 in 2009 and 198.17 in 2010.The nominal interest rate during this period was 5.8 percent.What was the real interest rate during this period?
A)0.4 percent
B)1.2 percent
C)-1.9 percent
D)-2.6 percent

Question

Quizplus · Accepted Answer

The real interest rate can be calculated using the formula: Real Interest Rate = Nominal Interest Rate - Inflation Rate. The inflation rate is calculated as ((198.17 - 184) / 184) * 100 = 7.7%. Therefore, the real interest rate is 5.8% - 7.7% = -1.9%.

Suppose the Consumer Price Index Was 184 in 2009 and 198.17