Macroeconomics
Real Interest Rate
Definition
What is Real Interest Rate?
An interest rateThe price of borrowing money or the return paid for lending it. after adjusting for inflationA sustained increase in the general price level, reducing the purchasing power of money..
Example in practice
How This Looks in Practice
A 12% nominal rate with 15% inflation produces a negative real rate.
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Related Terms
Macroeconomics
Gross Domestic Product
The total market value of final goods and services produced within a country during a period.
MacroeconomicsReal GDP
Gross domestic product adjusted for changes in prices.
MacroeconomicsNominal GDP
Gross domestic product measured at current prices without adjusting for inflation.
Market SentimentRisk-On Market
A market environment in which investors favour higher-risk assets.