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    Nominal Interest Rate = ___________
    Question

    Nominal Interest Rate = ___________

    A.

    Real Interest Rate × Inflation Rate

    B.

    Real Interest Rate – Inflation rate

    C.

    Real Interest Rate / Inflation rate

    D.

    Real Interest Rate + Inflation rate

    Correct option is D

    The nominal interest rate is calculated by adding the real interest rate to the inflation rate. This relationship is described by the Fisher Equation, which indicates how the expected inflation rate and the real rate of return combine to form the nominal interest rate.

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