suppose the nominal interest rate on a bank's savings account is 7% per year. if the...

suppose the nominal interest rate on a bank's savings account is 7% per year. if the inflation rate for the year was 2%, then the real interest rate is

select one:
a. -5%
b. 5%
c. 9%
d. 14%

Solutions

Expert Solution

Answer: correct answer is B

Real interest rate= nominal interest rate- inflation rate

Putting the values in formula

Real interest rate = 7%-2%

= 5%

Rahul Sunny answered 1 year ago

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