13th Edition
Roger A. Arnold
ISBN: 9781337617406




13th Edition
Roger A. Arnold
ISBN: 9781337617406
Textbook Problem

Why does the real interest rate, not the nominal interest rate, matter to borrowers and lenders?

To determine

The difference between real interest rate and nominal interest rate. 


The nominal interest rate is the amount in money terms of the interest payable, whereas the real interest is the amount that is equal to the nominal interest minus expected inflation rate.  According to the borrowers and lenders, they are only bothered about the real value of interest rate. This is because the interest rate paid by the borrowers and the interest rate received by the lenders is the real interest rate and not the nominal interest rate...

Still sussing out bartleby?

Check out a sample textbook solution.

See a sample solution

The Solution to Your Study Problems

Bartleby provides explanations to thousands of textbook problems written by our experts, many with advanced degrees!

Get Started

Additional Business Solutions

Find more solutions based on key concepts

Show solutions add

Why do economists sometimes offer conflicting advice to policymakers?

Brief Principles of Macroeconomics (MindTap Course List)

EXPECTED AND REQUIRED RATES OF RETURN Assume that the risk-free rate is 5% and the market risk premium is 6%. W...

Fundamentals of Financial Management, Concise Edition (with Thomson ONE - Business School Edition, 1 term (6 months) Printed Access Card) (MindTap Course List)

How can each element help a firm reach a target market?

Foundations of Business (MindTap Course List)