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Relation between nominal interest rate, real interest rate and inflation
If we denote the nominal interest rate by R, the real rate by r and the expected inflation by pe then the real interest rate is defined by:
r= R- pe or R= r+ pe
Describe the relation of money with wealth and income It is very possible to have a high income but no money and no wealth, or to be very wealthy and have a lot of money but no
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Q. How to evaluate total savings? Total savings Total savings S(r) depends positively on the real interest rate Remember that total saving
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