You are given the following information about the economy: the nominal interest rate = 8 percent; the real rate of interest = 6 percent. The inflation premium is:
A) 2 percent
B) 6 percent
C) 8 percent
D) 14 percent

Question

Quizplus · Accepted Answer

The inflation premium is the difference between the nominal interest rate and the real interest rate, which is 2 percent in this case (8% - 6% = 2%). Therefore, the correct answer is A) 2 percent.

You Are Given the Following Information About the Economy: the Nominal