Question

With the real interest rate equal to 3% and the expected inflation equal to 2​%. The value of the nominal interest rate is _____________​%.

Answer 1

Nominal interest rate = 5%

Step-by-step explanation:

Below is the calculation of the nominal interest rate:

The nominal interest rate can be calculated by adding inflation with the real interest rate.

Nominal interest rate(N) = Real interest rate (R) + Inflation

Nominal Interest rate (N) = 3% + 2%

Nominal interest rate (N) = 5%