If the nominal interest rate is 8 percent and inflation is 3 percent, approximately what is the real interest rate?
A) 11 percent
B) 8 percent
C) 5 percent
D) 3 percent

Name: If the nominal interest rate is 8 percent and inflation is 3 percent, approximately what is the real interest rate? A) 11 percent B) 8 percent C) 5 percent D) 3 percent
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Question

Quizplus · Accepted Answer

The real interest rate can be approximated by subtracting the inflation rate from the nominal interest rate: 8% - 3% = 5%.

If the Nominal Interest Rate Is 8 Percent and Inflation