Consider an individual who borrowed $$25,000 to purchase a used car at a fixed interest rate of 9%. If inflation is 9%, what is the real interest rate the individual will be paying

The real interest rate is 0%

Explanation:

To calculate the real interest rate, we can use the following formula:

Real Interest Rate = [ (1+nominal interest rate) / (1-+inflation rate) ]-1

Now, we plug the amounts into the formula:

Real Interest Rate = [ (1+0.09) / (1+0.09) ]-1

=[1.09/1.09]-1

=1-1

=0

Thus, the Real Interst Rate is equal to 0%