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The behavior of rats navigating three-arm mazes before and after the mazes are rotated demonstrates that:
Interest Rate
Refers to the cost of borrowing money, expressed as a percentage of the amount loaned, or the return on invested savings.
Loanable Funds
The money available for borrowing in the financial markets, determined by the saving rates of individuals and the banking sector's policies.
Inflation Rate
A measure of the rate at which the general level of prices for goods and services is rising, and, subsequently, purchasing power is falling.
Real Rate
This is the interest rate adjusted for inflation, representing the real cost of borrowing and the real yield to lenders or investors.
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