If the nominal interest rate is 8% while the inflation rate is 10%, then the real rate of return for lenders is:
A) 18%.
B) 10%.
C) 2%.
D) -2%.

Name: If the nominal interest rate is 8% while the inflation rate is 10%, then the real rate of return for lenders is: A) 18%. B) 10%. C) 2%. D) -2%.
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Question

Quizplus · Accepted Answer

The real rate of return for lenders can be calculated as nominal interest rate - inflation rate. 
So, real rate of return = 8% - 10% = -2%. Therefore, the best choice is D.

If the Nominal Interest Rate Is 8% While the Inflation