If the nominal interest rate is 5 percent and the real interest rate is 2 percent, then the inflation premium is
A)8 percent.
B)5 percent.
C)3 percent.
D)2 percent.

Name: If the nominal interest rate is 5 percent and the real interest rate is 2 percent, then the inflation premium is A)8 percent. B)5 percent. C)3 percent. D)2 percent.
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Question

Quizplus · Accepted Answer

The inflation premium is calculated by subtracting the real interest rate from the nominal interest rate: 5% - 2% = 3%.

If the Nominal Interest Rate Is 5 Percent and the Real