The Difference Between Nominal and Real Interest Rates Is That

question 11

Multiple Choice

The difference between nominal and real interest rates is that

• A)real interest rates are almost always greater than nominal interest rates.
• B)real interest rates are what you get after having adjusted nominal rates for inflation.
• C)nominal interest rates are what lenders receive and real interest rates are what borrowers pay.
• D)nominal interest rates are what borrowers pay and real interest rates are what lenders receive.

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Definitions:

Compound

A substance made up of two or more different elements chemically combined in fixed proportions.

Elements

Pure chemical substances consisting of a single type of atom, distinguished by their atomic number, which is the number of protons in their atomic nuclei.

Gold Foil Experiment

An experiment conducted by Ernest Rutherford which demonstrated that the atom has a tiny, dense nucleus by observing the deflection of alpha particles.

Rutherford

A term often referencing Ernest Rutherford, a physicist known for his discoveries in the field of nuclear physics and for the Rutherford model of the atom.