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


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