If the inflation rate is 2.5 percent and the nominal interest rate is 10 percent, then the real interest rate is
A) 2.5 percent.
B) 7.5 percent.
C) -7.5 percent.
D) -2.5 percent.
E) 12.5 percent.

Name: If the inflation rate is 2.5 percent and the nominal interest rate is 10 percent, then the real interest rate is A) 2.5 percent. B) 7.5 percent. C) -7.5 percent. D) -2.5 percent. E) 12.5 percent.
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Question

Quizplus · Accepted Answer

Real interest rate = Nominal interest rate - Inflation rate
= 10% - 2.5%
= 7.5%

If the Inflation Rate Is 2