If the nominal interest rate is 12 percent and inflation is 8 percent, the approximate real interest rate is:
Correct answer: A. 4 percent
- A. 4 percent
- B. 8 percent
- C. 12 percent
- D. 20 percent
Explanation
The approximate real interest rate is calculated by subtracting inflation from the nominal interest rate. Thus, 12 percent minus 8 percent gives a real rate of about 4 percent.
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About Economy of Pakistan
Pakistan's economy is examined through agriculture, industry, services, trade, remittances, employment, population, poverty and regional development. The topic also covers GDP and national income, inflation, fiscal and monetary policy, taxation, public debt, the balance of payments, energy constraints and structural challenges, including the role of the State Bank and development planning.
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