Expected real interest rates are the
A) interest rates quoted in the market minus the expected inflation rate.
B) interest rates quoted in the market plus the expected inflation rate.
C) expectations of future interest rates.
D) interest rates quoted in the market.

Question

Quizplus · Accepted Answer

Expected real interest rates are calculated by subtracting the expected inflation rate from the interest rates quoted in the market. This gives the real purchasing power of money lent or borrowed, taking into account inflation expectations.

Expected Real Interest Rates Are the