You Borrow at a Nominal Interest Rate of 10 Per

Multiple Choice

You borrow at a nominal interest rate of 10 per cent. If the inflation rate is 4 per cent, then the real interest rate is

A) the $10 in interest you have to pay.
B) 16 per cent.
C) 6 per cent.
D) 14 per cent.
E) 2.5 per cent.