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Ray Of Light [21]
3 years ago
14

If the inflation rate is 10 percent and the real interest rate is 12 percent, the nominal interest rate is:

Business
1 answer:
AlexFokin [52]3 years ago
7 0

Answer:

nominal interest rate= 0.2= 22%

Explanation:

Giving the following information:

Inflation rate= 10%

Real interest rate= 12%

<u>The real interest rate is the result of deducting from the nominal interest rate the inflation rate. Inflation has the opposite effect than interest.</u>

<u></u>

Real interest rate= nominal interest rate - inflation rate

nominal interest rate= real interest rate + inflation rate

nominal interest rate= 0.12 + 0.10

nominal interest rate= 0.2= 22%

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