If the nominal interest rate is 8% and the inflation rate is 3%, then the real interest rate is:
A)4%.
B)8%.
C)3%.
D)5%.

Name: If the nominal interest rate is 8% and the inflation rate is 3%, then the real interest rate is: A)4%. B)8%. C)3%. D)5%.
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Question

Quizplus · Accepted Answer

The real interest rate is calculated as the nominal interest rate minus the inflation rate. Therefore, the real interest rate in this scenario would be 5% (8% - 3%). So, the best choice is D.

If the Nominal Interest Rate Is 8% and the Inflation