The real rate of interest is the
A) nominal rate of interest minus the anticipated rate of inflation.
B) current rate actually paid by the borrower.
C) difference between the bank's lending and savings rates.
D) current rate which the government pays on its debt.

Question

Quizplus · Accepted Answer

The real rate of interest is the nominal rate of interest minus the anticipated rate of inflation. It represents the true increase in purchasing power that the lender receives after accounting for inflation.

The Real Rate of Interest Is the