a. The real interest rate is the sum of the nominal interest rate and the inflation rate.
b. The real interest rate is the nominal interest rate minus the inflation rate.
c. The nominal interest rate is the inflation rate minus the real interest rate.
d. The nominal interest rate is the real interest rate minus the inflation rate.
e. None of the above is true.
1 answer
The correct statement is:
b. The real interest rate is the nominal interest rate minus the inflation rate.
This is based on the definition of real and nominal interest rates, where the real interest rate adjusts the nominal interest rate to account for inflation.
