The real interest rate O O O O A. is the interest rate that is quoted on a finan

Question

The real interest rate O O O O A. is the interest rate that is quoted on a financial debt and a firm's assets. B. is the interest rate that adjusts GDP for changes in prices. O C. is equal to the nominal interest rate minus the inflation rate. O D. is equal to the inflation rate minus the nominal interest rate. Suppose an economy has an inflation rate of 3.8% and a bank makes a loan with an interest rate of 5.1%. In this case, the real interest ra Enter your response rounded to one decimal place.)

Explanation / Answer

Answer

Option C

Real interest rate=Nominal interest rate-inflation

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real interest rate=5.1-3.8=1.3%

the Real interest rate is 1.3%

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