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Real Interest Rate
Nominal rate − expected inflation
Definition
Real interest rate adjusts nominal rates for inflation. Formula: Real Rate = Nominal Rate - Expected Inflation. It represents the true cost of borrowing and return on lending after inflation.
Related Topics
#inflation adjustment
#purchasing power
#monetary policy
#economic indicator
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Category: Macro
Macro economics studies large-scale economic factors including interest rates, GDP, inflation, and government policies.
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