Let $ r $ denote the real interest rate and i denote the nominal interest rate; these two interest rates are related by:
A) $i = \pi$
B) $i = r - \pi$
C) $i = r + \pi$
D) $i = r / \pi$
E) None of these answers are correct.

Question

Let $  r  $ denote the real interest rate and i denote the nominal interest rate; these two interest rates are related by:
A) $i = \pi$
B) $i = r - \pi$
C) $i = r + \pi$
D) $i = r / \pi$
E) None of these answers are correct.

Quizplus · Accepted Answer

The nominal interest rate is the sum of the real interest rate and the inflation rate.

Let r r r Denote the Real Interest Rate and I Denote the Nominal

Let $r$ Denote the Real Interest Rate and I Denote the Nominal