If the nominal interest rate is 7.5% and the inflation rate is 4.0%,what is the real interest rate?
A)4.0%
B)9.5%
C)3.4%
D)11.5%

Name: If the nominal interest rate is 7.5% and the inflation rate is 4.0%,what is the real interest rate? A)4.0% B)9.5% C)3.4% D)11.5%
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Question

Quizplus · Accepted Answer

The real interest rate is calculated as the nominal interest rate minus the inflation rate. Therefore, the real interest rate is 7.5% - 4.0% = 3.5%. Answer C is the closest option, as it is only off by 0.1%.

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