The consumer price index was 200 in 2006 and 210 in 2007. The nominal interest rate during this period was 6.5 percent. What was the real interest rate during this period?

Question

Quizplus · Accepted Answer

The real interest rate is calculated by subtracting the inflation rate from the nominal interest rate. The inflation rate is ((210-200)/200)*100 = 5%. Therefore, the real interest rate is 6.5% - 5% = 1.5%.

The Consumer Price Index Was 200 in 2006 and 210