Question

Suppose the consumer price index was 184 in 2009 and 198.17 in 2010. The nominal interest rate during this period was 5.8 percent. What was the real interest rate during this period

Answer 1

Answer:

the real insterest rate during this period was -1.9%

Explanation:

for this case is necessary first make the calculation for the inflation in the period given

so we have that...

Inflation = (198.17 - 184)*100/184 = 7.7%

Real Interest rate = Nominal interest rate - inflation = 5.8 - 7.7 = -1.9%