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If a Lender Expects an Inflation Rate of 5% but the Inflation

Question 97

Multiple Choice

If a lender expects an inflation rate of 5% but the inflation rate unexpectedly increases to 7% and if the nominal interest rate was 10%,what is the real rate of interest earned?


A) 2%
B) 3%
C) 4%
D) 5%

Correct Answer:

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