What is the term for the difference between the nominal interest rate and the rate of inflation?
A)the discount rate
B)the coupon rate
C)the real interest rate
D)the prime rate

Question

Quizplus · Accepted Answer

The term for the difference between the nominal interest rate and the rate of inflation is the real interest rate. The nominal interest rate is the stated interest rate on a financial product, while the rate of inflation measures how much the general price level of goods and services is increasing. The real interest rate gives a more accurate picture of the purchasing power gained or lost on an investment or loan, as it is adjusted for inflation. The discount rate is the interest rate at which banks can borrow money from the central bank, the coupon rate is the interest rate paid on a bond, and the prime rate is the interest rate that commercial banks charge their most creditworthy customers.

What Is the Term for the Difference Between the Nominal