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

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

The real rate of interest is calculated by subtracting the inflation rate from the nominal interest rate. So, in this case, the real rate of interest would be -3% (2% - 5% = -3%). This means that the purchasing power of the money invested has actually decreased by 3%.

If the Nominal Interest Rate Is 2% and the Actual