The real interest rate A. is equal to the nominal interest rate minus the inflation rate.

Question

Question

The real interest rate

A. is equal to the nominal interest rate minus the inflation rate.

B. is the interest rate that adjusts GDP for changes in prices.

C. is equal to the inflation rate minus the nominal interest rate.

D. is the interest rate that is quoted on a financial debt and a firm's assets.

Answer 1

✔ Recommended Answer

Answer #1

Option A.

Real interest rate can be best defined as the interest rate prevailing in the market and is adjusted for the affects of inflation.
It is usually differentiated from nominal interest rate as the nominal interest rate does not consider the inflation affects.
The real interest rate is usually calculated by subtracting the inflation rate from the nominal interest rate.

Answer 2

Answer #2

Answer : Option A

As per Fisher's equation, Inflation rate = Nominal rate - Real rate

=> Real rate = Nominal rate - Inflation rate = Option A.

answered by: Tulsiram Garg

Answer 3

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​ The real interest rate A. is equal to the nominal interest rate minus the inflation rate.