The real interest rate equals the nominal interest rate ________ the inflation rate.
A)times
B)divided by
C)plus
D)minus
E)to the power of

Question

Quizplus · Accepted Answer

The real interest rate is the nominal interest rate adjusted for inflation. Therefore, the nominal interest rate needs to be reduced by the inflation rate, which gives us the real interest rate. This can be represented mathematically as the nominal interest rate minus the inflation rate, so the correct choice is D.

The Real Interest Rate Equals the Nominal Interest Rate ________