If your nominal rate of return is 9 percent and your real rate of return is 5 percent, what is the inflation rate?

Question

Question

Answer 1

Answer #1

As per Fisher’s theory,

Real rate of interest = Nominal rate of interest – Inflation

So, Inflation = Nominal rate of interest - Real rate of interest

= 9% - 5%

= 4%

So, the rate of inflation is 4%

Answer 2

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