If the nominal interest rate per year is 10% and the inflation rate is 4%, what is the real rate of interest?
A) 10%
B) 4%
C) 5.8%
D) None of the above

Question

Quizplus · Accepted Answer

The real rate of interest is calculated by subtracting the inflation rate from the nominal interest rate. 
Real rate of interest = Nominal rate of interest - Inflation rate
= 10% - 4%
= 6%
Therefore, the real rate of interest is 6%. None of the other options (A or B) are correct.

If the Nominal Interest Rate Per Year Is 10% and the Inflation