Answer:
d. 4 percent
Explanation:
In order to find the nominal interest rate we will use the formula
(1+Real interest rate)=(1+nominal interest rate)/(1+Inflation)
The real interest rate is 6%, the inflation is negative 2% because prices are falling at a rate of 2% and we have to find the nominal interest rate. We will put these values in the formula.
1.06=(1+Nominal interest rate)/(0.98)
1.06*0.98=1+ nominal interest rate
1.0388-1=Nominal interest rate.
Nominal interest rate = 0.0388 or 3.88%
We can round that off to 4%
