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- Subject
- Inflation & Productivityeconomics-mcqs › inflation-productivity
- Published
- 1 Jun 2019
- Last updated
- 28 May 2026
What is the real interest rate when the nominal interest rate is 7% and the inflation rate is 3%?
Multiple choice question for Inflation & Productivity. Select an option, then review the explanation below.
Explanation
The real interest rate is calculated by subtracting the inflation rate from the nominal interest rate. Here, 7% - 3% equals 4%, which is the correct real interest rate.
More Inflation & Productivity MCQs
Practice related questions from the same subject.
- 1.According to the Phillips curve theory, when does unemployment revert to its natural rate?
- 2.What do menu costs signify in the context of inflation?
- 3.What is the effect of a rise in production costs on the economy?
- 4.What is the likely effect on the economy when injections into it increase?
- 5.Which of the following can trigger demand-pull inflation?