What is the inflation rate given a nominal interest rate is 13% when the real rate is 6%?
A) 19.00%
B) 6.60%
C) 7.00%
D) 19.78%

Question

Quizplus · Accepted Answer

The inflation rate can be approximated using the Fisher equation, which is (1 + nominal rate) = (1 + real rate) * (1 + inflation rate). Plugging in the given values, (1 + 0.13) = (1 + 0.06) * (1 + inflation rate), solving for the inflation rate gives approximately 6.60%.

What Is the Inflation Rate Given a Nominal Interest Rate