What Is Real Interest Rate?
Answer:
Real Interest rate is derived when the Inflation rate is subtracted form the Nominal Interest rate. A Real Interest rate caters to three main kinds of risks that is represented to an investment. It includes issues such as time merit of money, Risk compensation etc.
Real Interest rates are very useful in material life. A higher real interest rate will head to higher demand of credit and on the other hand, a lower genuine interest rate will result in movement of demand to investment and consumption from savings.
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