Subtracting the Inflation Rate from the Nominal Rate of Interest

question 36

Multiple Choice

Subtracting the inflation rate from the nominal rate of interest gives us the:

• A) nominal rate of return.
• B) real interest rate.
• C) real rate of inflation.
• D) price level of the economy.

---

Definitions:

Sales Discount

A reduction from the usual cost of a product or service offered to customers to encourage prompt payment or increase sales.

Customers Pay

refers to the transactions where customers remit payment for goods or services received from a business.

Prepaid Freight

Costs paid by a shipper in advance for shipment of goods, indicating that the sender bears the freight charges.

Cash Discount

A reduction in the invoice price offered to buyers as an incentive for early payment.