Which of the Following Statements Is Correct About the Relationship

Multiple Choice

Which of the following statements is correct about the relationship between the nominal interest rate and the real interest rate?

A) The real interest rate is the nominal interest rate times the rate of inflation.
B) The real interest rate is the nominal interest rate minus the rate of inflation.
C) The real interest rate is the nominal interest rate plus the rate of inflation.
D) The real interest rate is the nominal interest rate divided by the rate of inflation.