Nominal Interest Rate: The nominal interest rate refers to the percentage increase in money or assets over time due to borrowing or investing, without taking into account any changes in purchasing power due to inflation.
Inflation Rate: The inflation rate measures how fast prices are rising for goods and services in an economy over a certain period of time.
Real Interest Rate: The real interest rate is calculated by subtracting the expected or actual inflation rate from the nominal interest rate. It represents the true purchasing power gained or lost from lending or borrowing money after accounting for inflation.