Which of the following is a way of expressing the real interest rate?
A) as the nominal interest rate minus the real interest rate
B) as the inflation rate minus the nominal interest rate
C) as the nominal interest rate minus the inflation rate
D) as the inflation rate minus the real interest rate

Question

Which of the following is a way of expressing the real interest rate?  
A) as the nominal interest rate minus the real interest rate 
B) as the inflation rate minus the nominal interest rate 
C) as the nominal interest rate minus the inflation rate 
D) as the inflation rate minus the real interest rate

Quizplus · Accepted Answer

The real interest rate can be expressed as the nominal interest rate minus the inflation rate. This is because the nominal interest rate includes both the real interest rate and the expected inflation rate. By subtracting the inflation rate from the nominal interest rate, we are left with the real interest rate.

Which of the Following Is a Way of Expressing the Real