The difference between the nominal rate of interest and the real rate of interest is

Question

Quizplus · Accepted Answer

The nominal rate of interest is the stated rate of interest on a loan or investment, whereas the real rate of interest is the nominal rate adjusted for inflation. In other words, the real rate of interest is the nominal rate minus the anticipated rate of inflation. Therefore, the difference between the nominal rate and the real rate is the expected inflation rate.

The Difference Between the Nominal Rate of Interest and the Real