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Interest Rates are a most necessary aspect in calculating the health of a macroeconomy. 

In Economics, corporations and banks consider both the real and nominal interest rates when making economic decisions

Definitions

  • The Real Interest Rate refers to the rate at which the value of all goods and services produced in a country increase in a given year
  • The Nominal Interest Rate refers to the addition of the real interest rate and the rate of inflation within a given year

Formula ➕ 

  • In essence: Real Interest Rate = Nominal Interest Rate - Inflation
  • ⬆️This is known as the Fisher Equation⬆️
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