Suppose the inflation rate is 10 per cent and that you deposit $10 000 in the bank that yields 8 per cent nominal interest rate. Your real interest rate is:
A) 0%.
B) 2%.
C) -2%.
D) 8%.

Question

Quizplus · Accepted Answer

The real interest rate can be calculated using the formula: real interest rate = nominal interest rate - inflation rate. Therefore, 8% (nominal interest rate) - 10% (inflation rate) = -2%.

Suppose the Inflation Rate Is 10 Per Cent and That