Question

If real economic growth is 3%, the inflation rate is 5%, and the nominal interest rate is 7%, then the real rate of interest is:

Answer 1

Based on the information given  the real rate of interest is:2%.

Real rate of interest

Using this formula

Real rate of interest=Nominal interest rate-Inflation rate-

Where:

Inflation rate=5%

Nominal interest rate=7%

Let plug in the formula

Real rate of interest=7%-5%

Real rate of interest=2%

Inconclusion the real rate of interest is:2%.

Learn more about real rate of interest here:brainly.com/question/25877453