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43.  Chapter ma2pe08r, Section .242, Problem 099 (ID: 099.24.2 - MC - MANK08) If the nominal interest...

43.  Chapter ma2pe08r, Section .242, Problem 099 (ID: 099.24.2 - MC - MANK08)

If the nominal interest rate is 4.2 percent and the rate of inflation is -0.5 percent, then the real interest rate is

a.

-8.4 percent.

b.

-2.1 percent.

c.

3.7 percent.

d.

4.7 percent.

0 0
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Answer #1

IF NOMINAL INTEREST RATE IS 4.2% AND RATE OF INFLATION IS -0.5%,REAL INTEREST RATE IS

REAL INTEREST RATE = NOMINAL INTEREST RATE - INFLATION RATE

REAL INTEREST RATE = 4.2-(-0.5)

REAL INTEREST RATE = 4.2+0.5

REAL INTEREST RATE = 4.7

HENCE THE CORRECT ANSWER IS OPTION D,4.7 PERCENT

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