Asked by Redwanul Haque on May 03, 2024
Verified
If the real interest rate is 6.8% and the inflation rate is 3.9%, what is the nominal interest rate?
Real Interest Rate
The interest rate adjusted for inflation, representing the true cost of borrowing and the real yield to savers.
Nominal Interest Rate
The interest rate as stated without adjustment for inflation, representing the actual percentage amount charged for borrowing money.
Inflation Rate
The percentage increase in the price level of goods and services in an economy over a given period of time.
- Master the technique of calculating the inflation rate by employing real and nominal interest rates.
Verified Answer
ZK
Learning Objectives
- Master the technique of calculating the inflation rate by employing real and nominal interest rates.