If the nominal interest rate is 5 percent and the real interest rate is 7 percent, then the inflation rate is

- 2%

Explanation:

Nominal interest rate is the sum of inflation rate and real interest rate.

Nominal interest rate = Real interest rate + Inflation rate

5 percent  = 7 percent + Inflation rate

Therefore,

Inflation rate = - 2%

Hence, if the nominal interest rate is 5 percent and the real interest rate is 7 percent, then the inflation rate is - 2%.

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