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Bill lends Joann​ $1,000 for a year at a nominal interest rate of 6​%. If both Bill and Joann expect the inflation rate to be 3​% next​ year, then the real rate of interest is

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rjr0112

the answer would be 3%

The real interest rate is 3% on the amount of the loan of $1,000 being lent by Bill to Joann.

What is a loan?

A loan is an amount lent by the lending party to the borrowing party who is in need of funds at a specified rate of interest.

Given values:

Amount of loan: $1,000

Nominal interest rate: 6%

Inflation rate: 3%

Computation of real rate of interest:

[tex]\rm\ Real \rm\ interest \rm\ rate =\rm\ Nominal \rm\ interest \rm\ rate - \rm\ Inflation \rm\ rate\\\rm\ Real \rm\ interest \rm\ rate=6\%-3\%\\\rm\ Real \rm\ interest \rm\ rate=3\%[/tex]

Therefore, the rate of real interest on the amount of the loan is 3%.

Learn more about the loan in the related link:

https://brainly.com/question/8347317

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