No Bull Economics Lessons

Macroeconomics & Microeconomics Concepts You Must Know

Essential Questions

How do you calculate the real interest rate?

Posted on April 16, 2014 at 10:45 AM

To calculate the real or nominal interest rate, we can use the Fisher equation. The real interest rate accounts for changes in the price level and is very important for businesses interested in investment spending. When real interest rates are low, businesses will increase spending. When real interest rates are high, businesses are less likely to invest.


Real Interest Rate = Nominal Interest Rate - Inflation Rate

(or)

Nominal Interest Rate = Real Interest Rate + Inflation Rate


AP Macroeconomics Unit 2 Measuring Economic Performance

Categories: AP Macroeconomics, Macro Unit 2 Measuring Economic Performance

Post a Comment

Oops!

Oops, you forgot something.

Oops!

The words you entered did not match the given text. Please try again.

You must be a member to comment on this page. Sign In or Register

0 Comments