It is impossible for the nominal rate of interest to be less than real rate of interest.

Question

Quizplus · Accepted Answer

It is possible for the nominal rate of interest to be less than the real rate of interest, particularly in cases of deflation. In deflation, the inflation rate becomes negative, thereby reducing the real rate of interest. However, the nominal rate of interest may remain positive, resulting in a situation where the nominal rate is lower than the real rate.

It Is Impossible for the Nominal Rate of Interest to Be