Practically, the real interest rate is equal to:
A) a savings account
B) the rate of return to long-term bonds
C) the marginal product of capital
D) the return to stock markets
E) the return to housing

Question

Quizplus · Accepted Answer

The real interest rate is the rate at which one can borrow or lend. It is determined by the supply and demand for loanable funds and represents the opportunity cost of using funds for one purpose rather than another. The marginal product of capital is the additional output that can be produced by using an additional unit of capital. As such, it represents the return that a firm can expect to receive from investing in capital. Therefore, C is the best choice as it aligns with the definition of the real interest rate.

Practically, the Real Interest Rate Is Equal To