Real Interest Rate vs. Nominal Interest Rate

These flashcards cover the key concepts regarding Real and Nominal interest rates, inflation impacts, and related calculations.

Real interest rate is equal to __ minus the inflation rate.

Nominal interest rate

If the nominal interest rate is 0.4% and the inflation rate is 3%, the real interest rate is __.

-2.6%

After depositing $100 in a savings account at a nominal interest rate of 0.4%, the nominal value after one year will be __.

$100.40

The inflation rate is __ if the price of apples increased from $1.00 to $1.10.

10%

The relationship between nominal interest rate, real interest rate, and inflation rate can be expressed by the formula: __.

Nominal interest rate = Real interest rate + inflation rate

The yield on the 3 month T-bill is __.

3.73%