If the nominal interest rate on a government bond is 6% and the rate of inflation is 4%, what is your real rate of return on this government bond?

Question

Quizplus · Accepted Answer

The real rate of return can be calculated by subtracting the inflation rate from the nominal interest rate. So, in this case, the real rate of return is 6% - 4% = 2%. Therefore, the best choice is B, which represents a real rate of return of +2%.

If the Nominal Interest Rate on a Government Bond Is