Which of the following combinations of real interest rates and inflation implies a nominal interest rate of 7 percent?
A) a real interest rate of 2.5 percent and an inflation rate of 2 percent
B) a real interest rate of 4 percent and an inflation rate of 11 percent
C) a real interest rate of 6 percent and an inflation rate of 1 percent
D) a real interest rate of 5.5 percent and an inflation rate of 3 percent
Correct Answer:
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