If the realized real interest rate in an economy is 6 percent,the nominal interest rate is 8 percent,and the expected inflation rate is 8 percent,then the realized inflation rate in the economy is ________.
A) 2 percent
B) 4 percent
C) 6 percent
D) 8 percent

Question

Quizplus · Accepted Answer

The realized real interest rate is calculated as the nominal interest rate minus the realized inflation rate. Given that the realized real interest rate is 6 percent and the nominal interest rate is 8 percent, the realized inflation rate must be 2 percent (8% - 6% = 2%).

If the Realized Real Interest Rate in an Economy Is