You Borrow at a Nominal Interest Rate of 10 Per

question 39

Multiple Choice

You borrow at a nominal interest rate of 10 per cent. If the inflation rate is 4 per cent, then the real interest rate is

• A) the $10 in interest you have to pay.
• B) 16 per cent.
• C) 6 per cent.
• D) 14 per cent.
• E) 2.5 per cent.

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