If you lend money at a nominal interest rate of 9 percent and the inflation rate is 1 percent,what real interest rate will you earn?
A) 3 percent
B) 4 percent
C) 8 percent
D) 12 percent
E) 15 percent

Question

Quizplus · Accepted Answer

The real interest rate is calculated by subtracting the inflation rate from the nominal interest rate. Therefore, 9% nominal interest rate - 1% inflation rate = 8% real interest rate.

If You Lend Money at a Nominal Interest Rate of 9