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Fiscal policy is Government budget, the total of government taxation and spending from the viewpoint of its impact on the economy as a whole. As distinct from other aspects of taxation such as its distributional effects.

Nominal interest rate is the actual money interest rate, as in "The Bank of England's base rate has been increased to 5.0%". Real interest rate is nominal interest adjusted for inflation, so if nom int is 5% and infl is 3% then real int is 2%.

2006-11-14 18:39:56 · answer #1 · answered by MBK 7 · 1 0

MBK's answer was great.

Just to clarify,Nominal means at any given time.

Real is adjusted for an arbitrary inflation rate.

thus, if the Interest rate in 1998 was 8% and you borrowed 10K, and inflation was 3%, then your real interest rate was only 5%.

Good job MBK!

2006-11-14 18:58:58 · answer #2 · answered by Russ C 2 · 0 0

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