The Fisher Effect states that a country's "real" rate of interest is the sum of the "nominal" interest rate and the expected rate of inflation over the period for which the funds are to be lent.

Question

Quizplus · Accepted Answer

The Fisher Effect states that the nominal interest rate is the sum of the real interest rate and the expected rate of inflation, not the real rate being the sum.

The Fisher Effect States That a Country's "Real" Rate of Interest