The nominal rate of interest is
A) the same as the price level.
B) the real rate of interest minus the previous year's change in the price level.
C) the interest rate actually paid by the borrower.
D) lower than the real rate in a period of inflation.

Question

Quizplus · Accepted Answer

The nominal rate of interest refers to the interest rate actually paid by the borrower, without any adjustment for inflation. This is different from the real rate of interest, which takes inflation into account.

Therefore, choice C is the correct answer.

The Nominal Rate of Interest Is