The real interest rate tells you Question 31 options: how fast the number of dollars in your bank account rises over time. how f

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The real interest rate tells you Question 31 options: how fast the number of dollars in your bank account rises over time. how f

ast the purchasing power of your bank account rises over time. the number of dollars in your bank account today. the purchasing power of your bank account today.

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1 answer:

Elan Coil [88] · Answer 1 · 2023-07-27T12:47:06+03:00

The real interest rate tells you how fast the purchasing power of your bank account rises over time.

<h3>What is meant by the real interest rate?</h3>

When a borrower pays back a loan with interest, the lender obtains a gain in purchasing power that is expressed as a percentage.
In the previous illustration, the lender made $8 on the $100 loan, or 8%.

<h3>What is real and nominal interest rate?</h3>

The real rate of a bond or loan is determined by adjusting a real interest rate to account for the impacts of inflation.
The interest rate before accounting for inflation is referred to as a nominal interest rate.

<h3>Why real interest rate is important?</h3>

Real interest rates are the main concern of economists.
Investors may be forced to take on greater risk or withdraw entirely depending on the real rate.
Without ever taking a dollar, it can drain your savings.
Every central bank in the world has it on their radar.

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