The nominal interest rate currently paid by local commercial banks is 8.5%. If the inflation rate is estimated at 2.8%, then the real interest rate is: Select one: a. 2.8% b. 5.7% c. None of the answers are correct d. 11.3% e. 8.5%

The nominal interest rate currently paid by local commercial banks is 8.5%. If the inflation rate is estimated at 2.8%, then the real interest rate is: Select one: a. 2.8% b. 5.7% c. None of the answers are correct d. 11.3% e. 8.5%

Survey Of Economics

10th Edition

ISBN:9781337111522

Author:Tucker, Irvin B.

Publisher:Tucker, Irvin B.

Chapter13: Inflation

Section: Chapter Questions

Problem 11SQ

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Question

The nominal interest rate currently paid by local
commercial banks is 8.5%. If the inflation rate is
estimated at 2.8%, then the real interest rate is:
Select one:
a. 2.8%
b. 5.7%
c. None of the answers are correct
d. 11.3%
e. 8.5%

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