The real rate is 1.25% and inflation is 5.25%.What is the approximate nominal rate?
A)6.50%
B)5.25%
C)3.25%
D)1.25%

Name: The real rate is 1.25% and inflation is 5.25%.What is the approximate nominal rate? A)6.50% B)5.25% C)3.25% D)1.25%
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Question

Quizplus · Accepted Answer

The nominal interest rate can be approximated by adding the real interest rate to the inflation rate. Therefore, 1.25% (real rate) + 5.25% (inflation) = 6.50% (nominal rate).

The Real Rate Is 1