How Does it Compare to Real Rates? Nominal rates are those that are quoted without taking into account the effect of inflation. In contrast, real rates are adjusted for inflation, so that the quoted rate represents the true cost of borrowing. In general, nominal rates are higher than real rates, because lenders require a higher return in order to offset the effects of inflation. What is the difference between nominal and real cash flows quizlet? Nominal cash flows are cash flows that are stated in terms of current prices. Real cash flows are cash flows that are stated in terms of prices that are adjusted for inflation.

#### What is the difference between nominal and real interest rates quizlet?

Nominal interest rates are the interest rates that are quoted by lenders, and they do not take into account the effects of inflation. Real interest rates are the interest rates that are adjusted for inflation, and they provide a more accurate measure of the true cost of borrowing.

##### What is the difference between the nominal interest rate and the real interest rate What is the insight behind the Fisher equation?

Nominal interest rates are the rates that are quoted by lenders, and they do not take into account the effects of inflation. In contrast, real interest rates are the rates that account for the effects of inflation. The insight behind the Fisher equation is that the real interest rate is equal to the nominal interest rate minus the rate of inflation. What is the difference between nominal income and real income quizlet? Nominal income is income that is not adjusted for inflation, while real income is income that is adjusted for inflation. In other words, real income is what you can actually buy with your income, while nominal income is your "raw" income. What is another term for nominal price in economics? There is no one universally accepted term for "nominal price" in economics. Some common terms used include "market price," "current price," or simply "price."