According to the Fisher equation,if a bank extends a loan for 3% and the inflation rate ends up being 5%,the:

Name: According to the Fisher equation,if a bank extends a loan for 3% and the inflation rate ends up being 5%,the:
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Quizplus · Accepted Answer

According to the Fisher equation, Nominal interest rate = Real interest rate + Inflation rate. 
So, in this case, Nominal interest rate = 3% and Inflation rate = 5%. 
Thus, Real interest rate = Nominal interest rate - Inflation rate = 3% - 5% = -2%. 
Hence, option D is correct.

According to the Fisher Equation,if a Bank Extends a Loan