Which of the Following Combinations of Nominal Interest Rates and Inflation

Multiple Choice

Which of the following combinations of nominal interest rates and inflation implies a real interest rate of 7 percent?

A) a nominal interest rate of 5 percent and an inflation rate of 4 percent.
B) a nominal interest rate of 4 percent and an inflation rate of 3 percent.
C) a nominal interest rate of 8 percent and an inflation rate of 1 percent.
D) a nominal interest rate of 14 percent and an inflation rate of 2 percent.