What is the primary difference between nominal and real interest rates?
What is the primary difference between nominal and real interest rates?
برائے نام اور حقیقی سود کی شرحوں میں بنیادی فرق کیا ہے؟
Explanation
The primary difference between nominal and real interest rates is that:
- Real interest rates are adjusted for inflation.
- While nominal interest rates are not.
- Real interest rates reflect the actual purchasing power of the interest earned.
- While nominal interest rates do not account for inflation's erosion of purchasing power.