The real rate of interest is the interest rate
A) charged on long-term government bonds.
B) associated with a riskless loan.
C) that large commercial banks charge their best customers.
D) after adjustment has been made for inflation.

Question

Quizplus · Accepted Answer

The real rate of interest is the interest rate after adjustment has been made for inflation. In other words, it is the interest rate that reflects the purchasing power of money borrowed or invested. Choices A, B, and C may all be associated with certain interest rates, but they are not necessarily indicative of the real rate of interest.

The Real Rate of Interest Is the Interest Rate