A car loan is fixed at 9% while inflation is 3%. The real interest rat…

Question

A car loan is fixed at 9% while inflation is 3%. The real interest rate is:

Accepted Answer

D. 6%

1. Subtract inflation from the nominal rate.
2. 9 minus 3 is 6 percent.
3. If inflation hit 9 percent the real rate would be zero.
_Source: OpenStax Principles of Macroeconomics for AP Courses 2e, Chapter 8, Inflation (CC BY 4.0)._

Answer

12%

Answer

3%

Answer

9%

A car loan is fixed at 9% while inflation is 3%. The real interest rate is:

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