What Is the Real Interest Rate Given a Nominal Rate

question 36

Multiple Choice

What is the real interest rate given a nominal rate of 8% and an inflation rate of 4.5%?

• A)3.3%
• B)4.5%
• C)4.9%
• D)8.0%

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Definitions:

Public Policy

Guiding principles and philosophies that underlie the laws and actions of a government, aimed at ensuring the public's general welfare.

Unenforceable

A term applied to a contract that, because of a law, cannot be enforced by the courts.

Substantive Unconscionability

Unconscionability that derives from one-sided, unjust, or overly harsh substance in a contract.

Maximum Interest Rate

The highest rate of interest that can be charged on loans or credit, often regulated by law to prevent usury.