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8 August, 13:55

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

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  1. 8 August, 14:51
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    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%
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