If the nominal interest rate is 8 percent and the real interest rate is 5 percent, then the inﬂation
premium is 13 percent.

Name: If the nominal interest rate is 8 percent and the real interest rate is 5 percent, then the inﬂation premium is 13 percent.
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Question

Quizplus · Accepted Answer

The inflation premium is simply the difference between the nominal interest rate and the real interest rate, so in this case it would be 8% - 5% = 3%.

If the Nominal Interest Rate Is 8 Percent and the Real