If the nominal interest rate is 7 per cent and the inflation rate is 5 per cent, the real interest rate is 12 per cent.

Name: If the nominal interest rate is 7 per cent and the inflation rate is 5 per cent, the real interest rate is 12 per cent.
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The real interest rate is calculated by subtracting the inflation rate from the nominal interest rate. Therefore, the real interest rate in this case would be 2 percent, not 12 percent.

If the Nominal Interest Rate Is 7 Per Cent and the Inflation