Nominal interest rates are
A)approximately equal to real interest rates plus the past year's inflation rate.
B)approximately equal to real interest rates plus the expected inflation rate.
C)a reflection of prior real interest rates plus past year's inflation rates.
D)considered Regulation Q ceiling rates plus the current inflation rate.

Question

Quizplus · Accepted Answer

Nominal interest rates include an inflation premium, so they are approximately equal to the real interest rate plus the expected inflation rate.

Nominal Interest Rates Are