According to the International Fisher Equation, how is the real interest rate calculated?

The International Fisher Equation states that the real interest rate is effectively calculated by adjusting the nominal interest rate for the expected inflation rate. This adjustment reflects the idea that nominal interest rates include compensation for anticipated inflation. Therefore, to determine the real interest rate, one takes the nominal interest rate and subtracts the expected inflation rate. This outcome represents the actual purchasing power of interest earnings.

Thus, option A provides the correct calculation, emphasizing the relationship between nominal rates and inflation in ascertaining the real interest rate. In contrast, other options misconstrue this relationship by either introducing incorrect operations, failing to incorporate inflation appropriately, or overlooking the fundamental connection among these rates.