If the nominal interest rate is 4.00% and the rate of inflation is 2.25%, what is the real interest rate?

a. 1.75%
b. 4.50%
c. 6.25%
d. 9.00%

The correct answer is A.

To solve this question we need to apply the following formula:  

r= i – = 4 % - 2.25% = 1.75 %

where:

When inflation is zero note how both interest rates (nominal and real are equal).

the aksumite empire was an ancient kingdom located in what is now northern ethiopia from the period of 100 ad to 940 ad. its capital was the city of aksum. the kingdom established itself as one of the 4 great powers at its time, along with persia, rome, and china.

the kingdom was rich in goods like gold, iron, and salt. it established strong commercial ties with the regions governed by rome, egypt, and persia (arabia). aksum was a key location in this commercial network. trade was also facilitated with the introduction of the aksumite currency.

answer; collective security;