If the nominal interest rate is 6 percent and the rate of inflation is 9 percent,then the real interest rate is

Question

Quizplus · Accepted Answer

The real interest rate is calculated by subtracting the inflation rate from the nominal interest rate. So, real interest rate = nominal interest rate - inflation rate. Therefore, real interest rate = 6% - 9% = -3%, which means the purchasing power of the investment has decreased by 3%. Option C is the correct answer.

If the Nominal Interest Rate Is 6 Percent and the Rate