In 1977,the annual inflation rate in Canada was 9.5%,while one-year interest rates were 7.9%.What was the real rate of return in Canada in 1977?

Question

Quizplus · Accepted Answer

To calculate the real rate of return, we subtract the inflation rate from the nominal interest rate. 
So real rate of return = nominal interest rate - inflation rate
= 7.9% - 9.5%
= -1.6%
Therefore, the real rate of return in Canada in 1977 was -1.46%. 'B' is the closest option to this answer.

In 1977,the Annual Inflation Rate in Canada Was 9