If the current inflation rate is 2​%, then the nominal rate necessary for you to earn an 8.5​% real interest rate on your investment is closest​ to:   A. 14.9​%   B. 10.7​%   C. 17.1​%   D. 12.8​%

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Interest Rate

When you deposit your money with the bank, the deposit earns you some extra money at the end of the specific period – something more than what you deposited. That amount of money that the bank pays you for keeping the money with the bank is the “interest” and the percentage at which the bank pays you for your amount is called the “interest rate”.