Question

Which type of interest rate includes the impact of inflation?

nominal interest rate
compounding interest rate
real interest rate
simple interest rate

Answer 1

Real interest rate

Step-by-step explanation:

This is the answer on the test

Answer 2

A nominal interest rate contains two parts: a real interest rate and an inflation premium. As an economy grows with inflation, the purchasing power of each dollar declines over time.

Step-by-step explanation: