If inflation is zero, then the nominal and real interest rates are the same.

Name: If inflation is zero, then the nominal and real interest rates are the same.
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Question

Quizplus · Accepted Answer

When the inflation rate is zero, the real interest rate is equal to the nominal interest rate. This is because there is no difference between the return earned on an investment and the purchasing power of that return due to inflation.

If Inflation Is Zero, Then the Nominal and Real Interest