GCEEconomicsInflation and Unemployment2019

If the nominal interest rate in an economy is 15% and the rate of inflation is 9%, the real interest rate is

A24%
B9%
C6%CORRECT
D135%
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Why the answer is C, and why the others tempt you.
The real interest rate is approximated by subtracting the inflation rate from the nominal interest rate: $15\% - 9\% = 6\%$. This is the Fisher approximation. Option A adds the two rates, D multiplies them, and B simply restates the inflation rate, all of which are incorrect.
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