Knowee
Questions
Features
Study Tools

Suppose that in a given year, the rate of inflation is 3 percent, and the nominal interest rate is 2 percent. The real interest rate is:

Question

Suppose that in a given year, the rate of inflation is 3 percent, and the nominal interest rate is 2 percent. The real interest rate is:
🧐 Not the exact question you are looking for?Go ask a question

Solution 1

The real interest rate can be calculated using the formula:

Real Interest Rate = Nominal Interest Rate - Inflation Rate

Given that the nominal interest rate is 2% and the inflation rate is 3%, we can substitute these values into the formula:

Real Interest Rate = 2% - 3% = -1%

So, the real intere Knowee AI is a powerful AI-powered study tool designed to help you to solve study problem.

Knowee AI  is a powerful AI-powered study tool designed to help you to solve study problem.
Knowee AI  is a powerful AI-powered study tool designed to help you to solve study problem.
Knowee AI  is a powerful AI-powered study tool designed to help you to solve study problem.
Knowee AI  is a powerful AI-powered study tool designed to help you to solve study problem.
Knowee AI  

This problem has been solved

Similar Questions

An investment had a nominal return of 9.9 percent last year. The inflation rate was 3.1 percent. What was the real return on the investment?

Laura wants to get 8% in real return of her certificate of deposit. If the annual inflation rate is estimated at 2%, how much should her nominal interest be?

The nominal interest rate B*. includes inflation and the real rate of interest.Maximum number of characters (including HTML tags added by text editor): 32,000

If inflation is growing at 4 percent and nominal GDP is growing at 5 percent, what is the economic growth rate?

The nominal risk-free rate is best described as the sum of the real risk-free rate and a premium for:A.maturity.B.liquidity.C.expected inflation.

1/3

Upgrade your grade with Knowee

Get personalized homework help. Review tough concepts in more detail, or go deeper into your topic by exploring other relevant questions.