Given a nominal interest rate of 3% and an inflation rate of 4.5%,what is the real interest rate?
A)3%
B)0%
C)-1.4%
D)1.5%
E)7.5%

Name: Given a nominal interest rate of 3% and an inflation rate of 4.5%,what is the real interest rate? A)3% B)0% C)-1.4% D)1.5% E)7.5%
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Question

Quizplus · Accepted Answer

Real interest rate = nominal interest rate - inflation rate
Real interest rate = 3% - 4.5%
Real interest rate = -1.5%
Therefore, the real interest rate is -1.5%, which is closest to option C (-1.4%).

Given a Nominal Interest Rate of 3% and an Inflation