During the prior year, the nominal interest rate was 10% while borrowers received a real return of 3%. What must have been the rate of inflation during that time period?

A. 3%

B. 7%

C. 10%

D. 13%

E. Cannot determine

Use the graph to answer the question that follows.

\fXLRAS Price Level SRAS, 110 AD year 2 SRAS. 100 AD year 1 Qo Real GDP