If the nominal interest rate is 5% and the expected inflation rate is 2%, then the expected real rate of interest is:

Name: If the nominal interest rate is 5% and the expected inflation rate is 2%, then the expected real rate of interest is:
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Quizplus · Accepted Answer

The expected real rate of interest is determined by subtracting the expected inflation rate from the nominal interest rate. Therefore, the expected real rate of interest in this scenario is 5% - 2% = 3%.

If the Nominal Interest Rate Is 5% and the Expected