A bank offers me 10% annual interest on an investment, but the inflation rate is 5%. What is the real interest rate? а. 4.76% b. 2% С. 5% d. 15%
A bank offers me 10% annual interest on an investment, but the inflation rate is 5%. What is the real interest rate? а. 4.76% b. 2% С. 5% d. 15%
Principles of Economics 2e
2nd Edition
ISBN:9781947172364
Author:Steven A. Greenlaw; David Shapiro
Publisher:Steven A. Greenlaw; David Shapiro
Chapter22: Inflation
Section: Chapter Questions
Problem 3SCQ: Compute the inflation rate for fruit prices from 2001 to 2004.
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![A bank offers me 10% annual interest on an investment, but
the inflation rate is 5%. What is the real interest rate?
а.
4.76%
b.
2%
C.
5%
d.
15%](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F69d24038-f624-4097-a9d3-00a56f78925f%2Fc4f038be-21bb-4dd4-a964-49fd57f7a52e%2F0tk1na9_processed.jpeg&w=3840&q=75)
Transcribed Image Text:A bank offers me 10% annual interest on an investment, but
the inflation rate is 5%. What is the real interest rate?
а.
4.76%
b.
2%
C.
5%
d.
15%
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