No Bull Economics Lessons

Macroeconomics & Microeconomics Concepts You Must Know

Macroeconomic Performance (7 of 10)

Question 7:
Assume that the inflation rate is 7% and the real interest rate is 9%. What is the nominal interest rate?

A.  -2%
B.  2%
C.  9%
D.  16%
E.  22%

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Correct Answer:  D, 16% Nominal interest rate = real interest rate + inflation rate (9% + 7% = 16%).