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timofeeve [1]
4 years ago
5

If the nominal interest rate is 6 percent and the rate of inflation is 10 percent, then the real interest rate is A. -16 percent

. B. 4 percent. C. -4 percent. D. 16 percent.
Mathematics
1 answer:
gladu [14]4 years ago
3 0

Answer: C. -4 percent

Step-by-step explanation:

<u>Nominal interest rate</u> is the interest rate before taking inflation into account.

<u>Real interest rate</u> takes the inflation rate into account.

The equation that links all three values is

nominal rate - inflation rate = real rate

6 - 10 = -4

-4 percent

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