According to the Fisher equation, the real interest rate equals the nominal interest rate minus the:
A) natural rate of interest
B) expected rate of inflation
C) expected rate of interest
D) ex ante rate of interest.

Question

Quizplus · Accepted Answer

The Fisher equation states that the real interest rate is equal to the nominal interest rate minus the expected rate of inflation. Therefore, option B (expected rate of inflation) is the correct answer.

According to the Fisher Equation, the Real Interest Rate Equals