Shawn puts money into an account. one year later he sees that he has 6 percent more dollars and that his money will buy 5 percent more goods. a. the nominal interest rate was 11 percent and the inflation rate was 5 percent. b. the nominal interest rate was 6 percent and the inflation rate was 5 percent. c. the nominal interest rate was 5 percent and the inflation rate was -1 percent. d. the nominal interest rate was 6 percent and the inflation rate was 1 percent.

d. The nominal interest rate was 6 percent and the inflation rate was 1 percent.

Explanation:

Nominal interest rate = real interest rate + inflation rate

Real interest rate is nominal interest rate less inflation rate. The real interest rate represents the real purchasing power of interest paid.

If the interest rate buys 5 percent more goods ,it means that the purchasing power and the real interest rate is 5 percent.

The nominal interest rate is 6 %

Inflation rate = nominal interest rate - real interest rate

= 6% - 5% = 1%

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