The Real Interest Rate Is 8 Percent and the Nominal

question 334

Multiple Choice

The real interest rate is 8 percent and the nominal interest rate is 10.5 percent. Is there inflation or deflation? What is the inflation or deflation rate?

• A)deflation; 2.5 percent
• B)deflation; 20.5 percent
• C)inflation; 2.5 percent
• D)inflation; 20.5 percent

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