The difference between the money rate of interest and the real rate of interest is often called the
A) real balance effect.
B) prime interest rate.
C) inflationary premium.
D) discount rate.

Question

Quizplus · Accepted Answer

The difference between the money rate of interest (nominal interest rate) and the real rate of interest is often referred to as the inflationary premium. This difference represents the additional compensation required by investors to account for the expected or anticipated inflation rates over the life of an investment.

The Difference Between the Money Rate of Interest and the Real