If the nominal interest rate is 4 percent and the real interest rate is -2.5 percent, then the inflation rate is 6.5 percent. -6.5 percent. 1.5 percent. -1.5 percent.

If the nominal interest rate is 4 percent and the real interest rate is -2.5 percent, then the inflation rate is

6.5 percent.

-6.5 percent.

1.5 percent.

-1.5 percent.

 

 

Answer:

Real interest rate = Nominal interest rate – Inflation rate

-2.5 = 4 – Inflation rate

Inflation rate = 4+2.5

Inflation rate = 6.5%

Correct option (A) 6.5%

Asked on February 15, 2018 in economics.
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