Subtracting the inflation rate from the nominal rate of interest gives us the:
A) nominal rate of return.
B) real interest rate.
C) real rate of inflation.
D) price level of the economy.

Question

Quizplus · Accepted Answer

Subtracting inflation from the nominal interest rate gives us the real interest rate, which is the actual rate of return an investor earns after accounting for inflation.

Subtracting the Inflation Rate from the Nominal Rate of Interest