If the nominal interest rate is 10 per cent and the rate of inflation is 15 per cent, the real interest rate is:

Name: If the nominal interest rate is 10 per cent and the rate of inflation is 15 per cent, the real interest rate is:
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Question

Quizplus · Accepted Answer

The formula for the real interest rate is: real interest rate = nominal interest rate - inflation rate. Applying this formula, we get:
real interest rate = 10% - 15% = -5%
Therefore, the correct answer is C) minus five per cent.

If the Nominal Interest Rate Is 10 Per Cent and the Rate