If the inflation rate is expected to be 5 percent and nominal interest rate is 9 percent, then the real interest rate will be
A) 14 percent.
B) 9 percent.
C) 5 percent.
D) 4 percent.

Name: If the inflation rate is expected to be 5 percent and nominal interest rate is 9 percent, then the real interest rate will be A) 14 percent. B) 9 percent. C) 5 percent. D) 4 percent.
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Question

Quizplus · Accepted Answer

Real interest rate = nominal interest rate - inflation rate
= 9% - 5%
= 4%

If the Inflation Rate Is Expected to Be 5 Percent