If the nominal interest rate equals 10 percent and the inflation ...

[WWatsford]

If the nominal interest rate equals 10 percent and the inflation rate equals 6 percent, what does the real interest rate equal?
 
  What will be an ideal response?

Question 2

Refer to the scenario above. If the curator values the painting at 45,000, which of the following problems is likely to arise?
 
  A) Adverse selection
  B) Free-rider problem
  C) The paradox of thrift
  D) The tragedy of the commons

[adf223]

Answer to Question 1

The real interest rate equals the nominal interest rate minus the inflation rate, or in this case, 10 percent minus 6 percent, which equals 4 percent.

Answer to Question 2

A

[WWatsford]

Excellent

[mohan]

Thanks for the timely response, appreciate it