Which is the most accurate statement about the relationship between inflation and interest rates?

Question

Quizplus · Accepted Answer

The real interest rate is the nominal interest rate adjusted for inflation, so it is calculated by subtracting the rate of inflation from the nominal interest rate. Therefore, option B is the most accurate statement. Option A is incorrect because it reverses the calculation of the real interest rate. Option C and D are also incorrect because they involve multiplying the nominal interest rate by the rate of inflation, which does not give an accurate calculation of the real interest rate.

Which Is the Most Accurate Statement About the Relationship Between