Question

If the nominal interest rate is 6 percent and the rate of inflation is 10 percent, then the real interest rate is:______

Answer 1

The real interest rate = - 4 percent

Step-by-step explanation:

Given:

Nominal interest rate = 6 percent

Rate of inflation = 10 percent

Find:

The real interest rate

Computation:

The real interest rate = Nominal interest rate - Rate of inflation

The real interest rate = 6 - 10

The real interest rate = - 4 percent