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Video
Nominal vs. Real Interest Rates
Key Concepts to Understand
Question 1 of 3
A person deposits money in a savings account that pays a 4% nominal interest rate. If the economy experiences an inflation rate of 1.5% during that year, what is the real interest rate on the savings?
5.5%
4%
2.5%
1.5%
Practice Questions: Test Your Understanding
Apply what you've learned with these practice questions. These questions test your understanding of the key concepts.
Question 1 of 3
If the nominal interest rate on a one-year loan is 5% and the expected inflation rate for that year is 3%, what is the expected real interest rate?
-2%
2%
3%
5%
8%
Key Takeaways
- 📊Master the fundamentals: Understanding these core concepts is essential for success in AP Economics.
- ✅Practice makes perfect: Use the interactive exercises and practice questions to reinforce your understanding.