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 is 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 is correct.

Quizplus · Accepted Answer

The correct relationship between nominal interest rate (i), real interest rate (R), and inflation rate (π) is given by the formula i = R + π, which is represented in choice C.

Let R Denote the Real Interest Rate and I Denote π\piπ

Let R Denote the Real Interest Rate and I Denote $\pi$