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

Question

3 years ago

5

. B. 4 percent. C. -4 percent. D. 16 percent.

1 answer:

gladu [14] · Answer 1 · 2021-11-20T13:44:35+03:00

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