⏱️ September 23, 2020
Nominal interest rates are the interest rates that have not been adjusted for the impact of inflation. Real interest rates are those that have been adjusted for the impact of inflation. The equation for nominal interest rates is real interest rate + inflation. The equation for the real interest rate is the nominal interest rate - inflation.
Economists can make predictions based on other economic indicators and what the expected inflation rate is going to be. Lending institutions factor in expected inflation when they set the nominal interest rates on loans or different interest-bearing accounts. If the inflation rate is higher than what the expected inflation rate is, the real interest rate will decrease. If the inflation rate is lower than the expected inflation rate, the real interest rate will increase.
💸 Unit 1: Basic Economic Concepts
1.2Opportunity Cost and the Production Possibilities Curve (PPC)
1.3Comparative Advantage and Trade
📈 Unit 2: Economic Indicators and the Business Cycle
2.1Circular Flow and GDP
2.6Real vs Nominal GDP
💲 Unit 3: National Income and Price Determination
3.5Equilibrium in Aggregate Demand-Aggregate Supply (AD-AS) Model
💰 Unit 4: Financial Sector
4.3Definition, Measurement, and Functions of Money
4.4Banking and the Expansion of the Money Supply
⚖️ Unit 5: Long-Run Consequences of Stabilization Policies
5.1Fiscal and Monetary Policy Actions in the Short-Run
5.3Money Growth and Inflation
5.4Deficits and the National Debt
🏗 Unit 6: Open Economy-International Trade and Finance
6.1Balance of Payments Accounts
6.4Effect of Changes in Policies & Economic Conditions on the Foreign Exchange Market
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