Respuesta :

abiolataiwo2015

Based on the information given  the real rate of interest is:2%.

Real rate of interest

Using this formula

Real rate of interest=Nominal interest rate-Inflation rate-

Where:

Inflation rate=5%

Nominal interest rate=7%

Let plug in the formula

Real rate of interest=7%-5%

Real rate of interest=2%

Inconclusion the real rate of interest is:2%.

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