1. What is a loan and how do banks profit from lending money?

2. How do lenders protect themselves against inflation when setting interest rates?

3. What happens to interest rates during deflation and why might they become negative?

4. How do interest rates influence economic decisions by individuals, businesses, and governments?

1. What is the Consumer Price Index and what role does it play in the economy?

2. How does inflation affect the purchasing power of money over time?

1. What are the three main forces that determine interest rates in the United States?

2. What is the difference between the Fed funds rate and the prime rate?

3. How do Treasury securities differ in terms of maturity and what are TIPS?

4. What factors do banks consider when setting interest rates for deposits and loans?

5. What are the main functions of the Federal Reserve System?

1. What is a nominal interest rate and how does it differ from a real interest rate?

2. Why did the Federal Reserve keep nominal interest rates very low after the 2008 recession?

3. How is the real interest rate calculated and what does it reveal about borrowing costs?

4. Why is the real interest rate higher than the nominal rate during deflation?

5. How can lenders estimate expected real interest rates when inflation is unknown?