The realized real rate of return for lenders is equal to the nominal rate of return:
A) plus the inflation rate.
B) minus the inflation rate.
C) times the inflation rate.
D) divided by the inflation rate times 100.

Question

Quizplus · Accepted Answer

The realized real rate of return for lenders is equal to the nominal rate of return minus the inflation rate. This is because inflation reduces the purchasing power of money, so lenders need to earn a return that is higher than the inflation rate in order to maintain the value of their investment.

The Realized Real Rate of Return for Lenders Is Equal