Asked by Jagmeet Sahota on Apr 29, 2024
Verified
It is possible to observe a positive nominal interest rate together with a negative real interest rate.
Nominal Interest Rate
The stated interest rate on a loan or financial product, not adjusted for inflation, reflecting the actual rate charged or paid.
Real Interest Rate
The interest rate adjusted for inflation, reflecting the true cost of borrowing or the true return on savings.
- Explore the relationship among nominal interest rates, real interest rates, and inflationary figures.
Verified Answer
SR
Sarah RashidApr 30, 2024
Final Answer :
True
Explanation :
This occurs when the nominal interest rate is lower than the inflation rate, causing the purchasing power of the interest earned to decrease over time.
Learning Objectives
- Explore the relationship among nominal interest rates, real interest rates, and inflationary figures.