The difference between the nominal interest rate and the real interest rate is the
A) price level.
B) GDP growth rate.
C) unemployment rate.
D) money growth rate minus the growth rate of real GDP.
E) inflation rate.

Question

Quizplus · Accepted Answer

The difference between the nominal interest rate and the real interest rate is the inflation rate. This is because the nominal interest rate includes both the real rate of return and the expected inflation, whereas the real interest rate is adjusted for inflation, reflecting the true purchasing power of the interest earnings.

The Difference Between the Nominal Interest Rate and the Real