The public often overestimates the negative effects of inflation due to a focus on nominal rates of interest.

Question

Quizplus · Accepted Answer

Nominal rates of interest are the rates quoted by banks and financial institutions. These rates do not take into account the effects of inflation on purchasing power. Therefore, when inflation is high, nominal interest rates may also be high, leading to the perception that inflation has a strong negative impact. However, in reality, the impact of inflation on individuals and the economy as a whole is more complex and nuanced.

The Public Often Overestimates the Negative Effects of Inflation Due