ECONOMICS
AGGREGATE DEMAND
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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The real interest rate is ____
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nominal interest rate-inflation rate
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nominal interest rate + inflation rate
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inflation rate-nominal interest rate
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None of the above
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Explanation:
Detailed explanation-1: -When there is inflation, the purchasing power of the interest you earn decreases. Your real interest is the nominal interest rate (the interest you get paid) minus the rate of inflation (the loss of purchasing power).
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