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kogti [31]
3 years ago
14

Suppose you borrow​ $2,000 for one year and at the end of the year you repay the​ $2,000 plus​ $110 of interest. If the expected

inflation rate was​ 2.2% at the time you took out the​ loan, what was the real interest rate you​ paid?
a. 2.2%
b. 3.3%
c. 5.5%
d. 8.8%
Business
1 answer:
UkoKoshka [18]3 years ago
6 0

Answer:

b. 3.3%

Explanation:

The nominal interest rate is 5.5%, (110/2000*100), and the inflation was 2.2%

The shortest way to calculate real interest rate is to subtract the inflation from the nominal interest rate, in this case

5.5% - 2.%2 = 3.3%

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