What is the real interest rate if the nominal interest rate is 7 percent and the expected inflation rate is 3 percent?
A) 0 percent
B) 4 percent
C) -4 percent
D) 10 percent
E) -3 percent

Question

Quizplus · Accepted Answer

The real interest rate is calculated by subtracting the expected inflation rate from the nominal interest rate. Real interest rate = 7% - 3% = 4%. Therefore, the answer is Option B.

What Is the Real Interest Rate If the Nominal Interest