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Economics (MindTap Course List)

13th Edition
Roger A. Arnold
ISBN: 9781337617383

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BuyFindarrow_forward

Economics (MindTap Course List)

13th Edition
Roger A. Arnold
ISBN: 9781337617383
Textbook Problem

To a potential borrower, which would be more important, the nominal interest rate or the real interest rate? Explain your answer.

To determine

The nominal interest rate and the real interest rate.

Explanation

The real interest rate is more important for a potential borrower. A potential borrower is one who tends to borrow more when the rate of inflation is higher. The inflation is reflected in the real interest rate rather than the nominal interest rate...

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