Explain the Difference Between Nominal and Real Interest Rates

question 181

Essay

Explain the difference between nominal and real interest rates.

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Definitions:

Net Sales

The revenue generated from goods or services sold by a company after deducting returns, allowances, and discounts.

Markup

The difference between price and a seller’s cost of an item for sale. In dollars, it is the amount added to the cost of the goods in order to have a gross profit high enough to cover operating expenses and to make a net profit.

Lower Of Cost

An accounting principle where inventory is recorded at the lower of either its original cost or its current market value.

Market Value

The current price at which an asset or service can be bought or sold in an open market.