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If the Inflation Rate Is Zero, Then the Nominal and Real

question 202

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If the inflation rate is zero, then the nominal and real interest rate are the same.


Definitions:

Economy

The large set of interrelated economic production and consumption activities that aid in determining how scarce resources are allocated.

Money

A medium of exchange that facilitates the transfer of goods and services, acting as a unit of account, a store of value, and sometimes, a standard of deferred payment.

Deposits

Money placed into a financial institution for safekeeping, which can earn interest over time.

Loans

Sums of money borrowed that are expected to be paid back with interest over a specified period.

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