Question

Select the correct answers from the drop-down menus to complete the statement:

Interest rate accounts for inflation, while the _______ interest rate does not.

A) nominal
B) real

When measuring the return on an investment, the _______ rate does not.

A) nominal
B) real

Answer 1

The nominal interest rate does not account for inflation, while the real interest rate does.

Step-by-step explanation:

The correct answers to the multiple-choice questions are:

1. A) nominal
2. B) real

When measuring the return on an investment, the nominal interest rate does not account for inflation, while the real interest rate does. The nominal interest rate is the stated interest rate, while the real interest rate adjusts for inflation and represents the true return on an investment.