If the rate of inflation is 5 percent and the real interest rate is 3 percent, the nominal interest rate should be

Name: If the rate of inflation is 5 percent and the real interest rate is 3 percent, the nominal interest rate should be
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Question

Quizplus · Accepted Answer

The nominal interest rate can be calculated by adding the rate of inflation to the real interest rate. So, nominal interest rate = real interest rate + rate of inflation = 3% + 5% = 8%. Therefore, the correct choice is C, i.e., 8 percent.

If the Rate of Inflation Is 5 Percent and the Real