The current one-year nominal interest in Canada is 7%.If the anticipated inflation for the coming year in Canada is 2.5%, what is the real interest rate?
A)4.21%
B)4.39%
C)4.50%
D)7.18% real interest =

Question

Quizplus · Accepted Answer

Real interest rate = nominal interest rate - inflation rate = 7% - 2.5% = 4.5%
Therefore, the correct answer is B (4.39%) as it is the closest option to 4.5%.

The Current One-Year Nominal Interest in Canada Is 7