If Mr. Garrison is paid an interest rate of 4% on his savings, but the inflation rate is 7%, the real interest rate Mr. Garrison earns is
A) 28%.
B) 4%.
C) -3%.
D) -7%.

Name: If Mr. Garrison is paid an interest rate of 4% on his savings, but the inflation rate is 7%, the real interest rate Mr. Garrison earns is A) 28%. B) 4%. C) -3%. D) -7%.
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Question

Quizplus · Accepted Answer

The real interest rate is the nominal interest rate minus the inflation rate. Therefore, Mr. Garrison's real interest rate is 4% - 7% = -3%.

If Mr Garrison Is Paid an Interest Rate of 4% on on His