The anticipated value of the
Concept introduction:
Price Index: Price index measures the relative change in the price of a market basket of goods and services over a period of time. Price index of the base year is always 100.
Anticipated Inflation: Inflation refers to continuous increase in the prices of commodities over time. Anticipated inflation refers to an inflation that is foreseen by people before it occurs.
Nominal Interest Rate (i): i is the rate of interest paid on deposits and charged on loans by a bank. It is not adjusted for inflation.
Real Interest Rate (r): r is the interest rate actually earned on deposits by depositors or paid on loans by borrowers. It is adjusted for inflation.
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Economics Today: The Macro View, Student Value Edition (19th Edition)
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