Suppose you have $100 to invest for a year and the nominal interest rate is 7 percent. If the inflation rate during the year is 4 percent, at the end of the year your real gain from the investment is approximately
A) $3.
B) $4.
C) $7.
D) $11.

Question

Quizplus · Accepted Answer

The real gain from an investment is calculated by subtracting the inflation rate from the nominal interest rate. Here, 7% - 4% = 3%. Therefore, the real gain is approximately $3.

Suppose You Have $100 to Invest for a Year and the Nominal