Real Interest Rate?

Question

The real interest rate must be
A) high if inflation rate is greater than the nominal interest.
B) positive if the nominal rate of interest is greater than the rate of inflation.
C) high if the nominal interest rate of interest is high.
D) negative if the nominal rate of interest is greater than the rate of inflation.
E) low if the nominal interest rate is high.

Any help is appreciated. Thank you!

Answer 1

Real interest rate is equal to:

Nominal rate - inflation rate.

All you have to do is apply that formula to each answer.

For example, A is NOT true because if the inflation rate is higher than the nominal rate; your real interest rate is negative.

Edit: Obviously C & E cannot be solved without the inflation rate, so cross them off. Using the supplied formula; it can be easily determined whether B or D is the correct answer.

Answer 2

For interest rates check the Wall Street Journal.

Answer 3

challenging point. query from yahoo and bing. just that may help!