The real interest rate describes:
A) the net return to government bonds
B) the rate of return adjusted for inflation
C) the rate of return in units of a currency
D) the return with an interest rate equal to zero
E) the rate of return in real goods

Question

Quizplus · Accepted Answer

The real interest rate is defined as the nominal interest rate minus the inflation rate. It tells you the actual rate of return on an investment after adjusting for inflation. Therefore, option B is the correct answer as it states the rate of return adjusted for inflation.

The Real Interest Rate Describes