The difference between the nominal interest rate and the real interest rate is
Answers
Real and Nominal Intrest Rate. The Difference between Nominal and Real intrest rate is that the real interest rate is approximately equal to the Nominal Intrest Rate minus the expected rate is of inflation.
The normal intrest rate is the simplest type of Intrest Rate. It is the stated interest rate of a given bond or loan. The nominal interest rate is in the actual monetary price that borrowers pay to lenders to use their money. If the nominal rate on a loan is 5%, then borrowers can expect to pay $5 of interest for every $100 loaned to them.
Real Interest Rates
A real interest rate is the interest rate that takes inflation into account. This means it adjusts for inflation and gives the real rate of a bond or loan. ... The calculation used to find the real interest rate is the nominal interest rate minus the actual or expected inflation rate.