All of humanity has been in state of corruption and helpless to obtain salvation
It was near the sea which was good for trade, and it was surrounded by mountains and rivers which made it harder for others to attack it.
I don’t speak this language but ok :)
Given Information:
Nominal Interest Rate = 6.3 %
Inflation Rate = 1.7 %
Required Information:
approximate real rate of interest?
exact real rate of interest?
Answer:
approximate real rate of interest = 4.6%
exact real rate of interest = 4.5%
Explanation:
Nominal Interest Rate: The interest rate that a person earn or pay on a loan.
Real Interest Rate: The nominal interest rate after adjusting for inflation.
Relation between Nominal and Real Interest Rate: The fisher equation
Real Interest Rate = Nominal Interest Rate - Inflation Rate
approximate real rate of interest = 6.3% - 1.7% = 4.6%
exact real rate of interest = (1 + 0.063)/(1 + 0.017) = 1.045 = 4.5%
