Which Statement Best Describes the Relationship Between the Nominal Interest

question 16

Multiple Choice

Which statement best describes the relationship between the nominal interest rate and the real interest rate?

• A) The real interest rate is the nominal interest rate times the rate of inflation.
• B) The real interest rate is the nominal interest rate minus the rate of inflation.
• C) The real interest rate is the nominal interest rate plus the rate of inflation.
• D) The real interest rate is the nominal interest rate divided by the rate of inflation.

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