The real interest rate is the: nominal rate minus the inflation rate
Option B is correct.
What is the meaning of real interest rate?
A real interest rate is an interest rate that has been adjusted to remove the effects of inflation. Once adjusted, it reflects the real cost of funds to a borrower and the real yield to a lender or to an investor. A real interest rate reflects the rate of time preference for current goods over future goods.
What is the real rate of inflation?
But our real-world experience tells us the official inflation rate doesn't reflect the actual cost increases of everything from burritos to healthcare. The grim reality is that real inflation is 7+% per year.
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