The correct answer is (c) 14%.
The real interest rate is the interest rate that is adjusted for inflation. It is calculated by subtracting the inflation rate from the nominal interest rate. In this case, the nominal interest rate is 24% and the inflation rate is 10%. Therefore, the real interest rate is 24% – 10% = 14%.
Option (a) is incorrect because it is the nominal interest rate, not the real interest rate. Option (b) is incorrect because it is the sum of the nominal interest rate and the inflation rate. Option (d) is incorrect because it is the inflation rate, not the real interest rate.
The real interest rate is important because it is the true cost of borrowing money. When you borrow money, you are not just paying interest on the loan, you are also paying for the loss of purchasing power due to inflation. The real interest rate tells you how much of your purchasing power you will lose by borrowing money.