Nominal and Real interest rate
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In 1970s Real interest rates were negative
Inflation eroded peoples savings much more than nominal payments increased them
When real interest rate > nominal interest rate
There is deflation. Makes it negative.
Real interest rate
interest rate corrected for inflation Nominal interest rate-inflation rate
Nominal Interest rate
interest rate reported without correction for inflation
When nominal interest rate > Real interest rate...
isn't so much inflation to even them out
