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Explain the meaning of nominal interest rate and real interest rate. How are they

Chapter 24, Problem Questions for Review 24.5

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QUESTION:

Explain the meaning of nominal interest rate and real interest rate. How are they related?

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QUESTION:

Explain the meaning of nominal interest rate and real interest rate. How are they related?

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Nominal interest rate refers to the interest rate set by the country's respective central banks, which is then charged by the commercial banks while providing loans. The real interest rate was coined by Jacob Haas, which gets formed when the nominal interest rate gets adjusted with the expected inflation rate.

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