If the nominal interest rate in an economy is 4 percent and the real interest rate in the economy is 2 percent,the rate of inflation in the economy must be ________.

Name: If the nominal interest rate in an economy is 4 percent and the real interest rate in the economy is 2 percent,the rate of inflation in the economy must be ________.
Brand: Quizplus
Rating: 4.8 (43 reviews)

Question

Quizplus · Accepted Answer

The real interest rate is the nominal interest rate minus the inflation rate. Therefore, inflation rate = nominal interest rate - real interest rate = 4% - 2% = 2%.

If the Nominal Interest Rate in an Economy Is 4