If the inflation rate is 2 percent and the real interest rate is 7 percent,then the nominal interest rate is
A)3.5 percent.
B)5 percent.
C)9 percent
D)7 percent.

Question

Quizplus · Accepted Answer

The nominal interest rate is the sum of the real interest rate and the inflation rate. So, nominal interest rate = real interest rate + inflation rate.

In this case, nominal interest rate = 7% + 2% = 9%. Therefore, option C) is the correct choice.

If the Inflation Rate Is 2 Percent and the Real