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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
note on Marris growth maximizing model
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.measure to control inflation
Furthermore it can be seen that there are interesting relationships between the remaining variables. Firstly, at the 95% significance level it can be seen that interest rates Grang
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