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QUESTION:
If inflation is 6 percent and the real interest rate is 3 percent, then the nominal interest rate should be _______.

ANSWER:

Given:

  • Real Interest Rate = 3%
  • Inflation Rate = 6%

Substitute these values into the formula:

Nominal Interest Rate=3%+6%=9%\text{Nominal Interest Rate} = 3\% + 6\% = 9\%

Final Answer:

c. 9 percent


Posted by Cleveland on September 9, 2024
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