In the late 1970s, nominal interest rates were high and inflation rates were also very high and were even higher than the nominal interest rate on some years. During this period, real interest rates were:

Question

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Real interest rates are calculated by subtracting the inflation rate from the nominal interest rate. In the late 1970s, inflation rates were higher than nominal interest rates on some years, meaning that real interest rates were negative. In other years, nominal interest rates were high enough to offset inflation, resulting in low real interest rates. Therefore, real interest rates were low in some years and negative in others.

In the Late 1970s, Nominal Interest Rates Were High and Inflation