If the inflation rate is 3 percent and the real interest rate is 5 percent, what is the nominal interest rate?
A)2 percent
B)3 percent
C)5 percent
D)8 percent

Name: If the inflation rate is 3 percent and the real interest rate is 5 percent, what is the nominal interest rate? A)2 percent B)3 percent C)5 percent D)8 percent
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Question

Quizplus · Accepted Answer

The nominal interest rate is equal to the sum of the real interest rate and the inflation rate. Therefore, the nominal interest rate is 8 percent (5 percent + 3 percent).

If the Inflation Rate Is 3 Percent and the Real