What is the real interest rate if the nominal interest rate is 7% and the expected...
What is the real interest rate if the nominal interest rate is
7%
and the expected inflation rate is
5%
over the course of a year?
ir =
(Round your response to two decimal places.)
Homework Answers
Real interest rate is the rate of interest that a lender or a saver receives after taking into account inflation.
According to formula:-
Real interest rate = Nominal interest rate - Inflation rate
Therefore, Real interest rate = (7 - 5)% = 2%
Real interest rate is 2.00%
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