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From 1991 to​ 2000, the U.S. economy had an annual inflation rate of around 2.93​%. The...

From 1991 to​ 2000, the U.S. economy had an annual inflation rate of around 2.93​%. The historical annual nominal​ risk-free rate for this same period was around 5.02​%. Using the approximate nominal interest rate equation and the true nominal interest rate​ equation, compute the real interest rate for that decade. What is the estimated real interest rate using the approximate nominal interest rate equation for that​ decade?

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The solution to the given question is provided below:

Real interest rate for the decade=Nominal rate-inflation rate=5.02%-2.93%=2.09%

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