Question

What is the real interest rate for an account with a nominal interest rate of 1% when the rate of inflation is 2%?

Answer 1

Answer:

Real Interest Rate = -1%

Step-by-step explanation:

Nominal Interest rate is the general market prevailing interest rate. Real Interest rate is nominal interest rate adjusted to price level change (inflation or deflation)

Real Interest Rate = Nominal Interest Rate - Inflation rate

1% - 2% = -1%

Answer 2

Answer:

-1                                                                                                                                                    

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