Question

A main difference among real and nominal interest proceeds is that

Answer 1

The nominal interest rate is a simple concept to understand; for example, if you borrow $100 at a 6% interest rate, you can expect to pay $6 in interest without taking inflation into account. The disadvantage of using the nominal interest rate is that it does not adjust for the inflation rate.

Answer 2

The nominal interest rate is a simple concept to understand; for example, if you borrow $100 at a 6% interest rate, you can expect to pay $6 in interest without taking inflation into account. The disadvantage of using the nominal interest rate is that it does not adjust for the inflation rate.