Question

If the nominal interest rate was 12 percent and the inflation rate was 10 percent in 1980, while the nominal interest rate was 7 percent and the inflation rate was 2 percent in 2001, then

Answer 1

the percent change formula is amount of change divided by original number
so 7/8-3/8= the amount of change or 4/8
4/8 divided by the original number (3/8)
to divide fractions you multiply the first fraction by the reciprocal of the second number
7/8*8/3= 7/1* 1/3 = 7/3
do 7/3 in a calculator = 2.33 repeating
move the decimal two places to the right
and the percent change is a 233% increase