Which statement best explains whether interest rates are positive or negative?

Question

Quizplus · Accepted Answer

Real interest rates are adjusted for inflation and can be negative if the inflation rate is higher than the nominal interest rate. However, nominal interest rates cannot be negative in most cases as it is not economically feasible for lenders to pay borrowers for borrowing money. Therefore, option A correctly states that real interest rates can be either positive or negative, but nominal interest rates must be positive.

Which Statement Best Explains Whether Interest Rates Are Positive or Negative