Question: What is the difference between the nominal interest rate and the real interest rate? - Select - is always lower than - Select - because
What is the difference between the nominal interest rate and the real interest rate?
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is always lower than
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because it is defined as the difference between
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and the expected rate of inflation.
What is the logic behind the implied positive relationship between expected inflation and nominal interest rates?
Investors will only invest funds if the nominal interest rate is expected to
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inflation.
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