If the nominal interest rate is 12 percent and the real interest rate is 8 percent, then the inflation premium is:
A)8 percent.
B)12 percent.
C)4 percent.
D)20 percent.

Name: If the nominal interest rate is 12 percent and the real interest rate is 8 percent, then the inflation premium is: A)8 percent. B)12 percent. C)4 percent. D)20 percent.
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Question

Quizplus · Accepted Answer

The inflation premium is the difference between the nominal interest rate and the real interest rate. In this case, the inflation premium is 12% - 8% = 4%.

If the Nominal Interest Rate Is 12 Percent and the Real