The main difference between nominal and real interest rates is that the latter accounts for:
A)lenders' fees
B)international tariffs
C)competition
D)inflation

Question

Quizplus · Accepted Answer

The main difference between nominal and real interest rates is that the latter accounts for inflation
Key Takeaway: When calculating real interest rates, the lender is compensated for loss of value through a consideration of inflation. The relationship between the two can be described in this equation: real interest rate = nominal interest rate - calculated inflation. In many cases, the inflation component of future interest rates can only be estimated and those estimates may or may not be equivalent to the real inflation amounts.

The Main Difference Between Nominal and Real Interest Rates Is