If the nominal interest rate is 14 percent and the real interest rate is 2 percent,what is the inflation rate?
A) 4 percent
B) 6 percent
C) 12 percent
D) 16 percent

Question

Quizplus · Accepted Answer

The nominal interest rate is the rate at which money grows in the economy without taking into account the effects of inflation. The real interest rate takes into account the effects of inflation.
Real interest rate = Nominal interest rate - Inflation rate
2 percent = 14 percent - Inflation rate
Inflation rate = 14 percent - 2 percent
Inflation rate = 12 percent

If the Nominal Interest Rate Is 14 Percent and the Real