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If the Real Interest Rate Is 3 Percent and the Inflation

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If the real interest rate is 3 percent and the inflation rate is 2 percent, what is the nominal interest rate?


Definitions:

Opportunity Cost

The cost of forgoing the next best alternative when making a decision or choosing to invest in one option over another.

Reducing Unemployment

The act of implementing policies or actions by governments or businesses to decrease the number of unemployed individuals in the economy.

Phillips Curve

An economic theory suggesting an inverse relationship between the rate of inflation and the rate of unemployment in an economy.

Unemployment Rate

The quantum of the working population that is job-free and in active search of employment.

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