If a nominal interest rate is 8 percent, and inflation is 8 percent, then the real...

Question

Question

If a nominal interest rate is 8 percent, and inflation is 8 percent, then the real interest rate is:

minus 2 percent.

16 percent.

0 percent.

8 percent.

Answer 1

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Answer #1

Inflation = Nominal interest rate - Real interest rate

8 = 8 - Real interest rate

Real interest rate = 8 - 8 = 0

Answer is 0 percent.

Answer 2

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