Spencer took a 9 percent one-year fixed-rate loan to buy a new car. He expected to pay a real interest rate of 5 percent.
If at the end of the year Spencer only paid a 3 percent real interest rate, which of the following is true?
A. The actual inflation rate was 6%
B. The nominal interest rate was 5%
C. The actual inflation rate was 4%
D. The nominal interest rate was 3%
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