The difference between real and nominal interest rates is

A) unimportant because they are usually the same.
B) important because bonds are expressed in real rates.
C) the unemployment rate.
D) unimportant unless there is deflation.
E) the expected inflation rate.

Real Interest Rates

The interest rate adjusted for inflation, reflecting the real cost of borrowing and the real yield to lenders or investors.

Nominal Interest Rates

The stated or advertised interest rate on a loan or investment, not adjusted for inflation.

Expected Inflation Rate

The anticipated rate at which the general level of prices for goods and services will rise over a specific period.