In the late 1970s, nominal interest rates were high and inflation rates were very high. As a result, what were real interest rates?

Question

Quizplus · Accepted Answer

Real interest rates are calculated by subtracting the inflation rate from the nominal interest rate. In the late 1970s, nominal interest rates were high (around 10-15%), but inflation rates were very high (around 10-15% as well). Therefore, real interest rates were low, and in some years they were actually negative. This means that investors were losing money in real terms even though they were earning a positive nominal return.

In the Late 1970s, Nominal Interest Rates Were High and Inflation