If the real interest rate is 3% and the inflation rate is 7%, then the nominal interest rate equals:
A)3%.
B)4%.
C)7%.
D)10%

Name: If the real interest rate is 3% and the inflation rate is 7%, then the nominal interest rate equals: A)3%. B)4%. C)7%. D)10%
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Question

Quizplus · Accepted Answer

The nominal interest rate is the sum of the real interest rate and the inflation rate. Therefore, 3% (real interest rate) + 7% (inflation rate) = 10% (nominal interest rate).

If the Real Interest Rate Is 3% and the Inflation