If the inflation premium is 3 percent and the real interest on a loan is 4 percent, then the nominal interest rate is
A)1 percent.
B)−1 percent.
C)7 percent.
D)0.75 percent.

Name: If the inflation premium is 3 percent and the real interest on a loan is 4 percent, then the nominal interest rate is A)1 percent. B)−1 percent. C)7 percent. D)0.75 percent.
Brand: Quizplus
Rating: 5.0 (27 reviews)

Question

Quizplus · Accepted Answer

The nominal interest rate is the sum of the real interest rate and the inflation premium, which is 4% + 3% = 7%.

If the Inflation Premium Is 3 Percent and the Real