2019 · Q15
What is the real interest rate on a Credit Card loan bearing 24% interest per year, if the rate of inflation is 10%?
indian-polity-economyeconomy-fundamentals
- A240%
- B34%
- C14%
- D4%
Explanation
By the Fisher equation, real interest rate is approximately the nominal rate minus inflation: 24% - 10% = 14%. Option B (34%) wrongly adds the two rates, while A and D are arithmetic errors. The stored key B has been corrected per UPSC's official answer key.