1.

people expect an inflation rate 5 percent and the real interest rate is positive. then tge nominal interest rate will be? ​

Answer»

terest rate ≈ NOMINAL interest rate − inflation rate. To find the real interest rate, we take the nominal interest rate and subtract the inflation rate. For example, if a LOAN has a 12 PERCENT interest rate and the inflation rate is 8 percent, then the real RETURN on that loan is 4 percent.



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