The nominal interest rate for loans = 6 %
Evaluation :
Nominal interest rate for loan = real interest loan + expect price rise
= 4% + 2%
= 6%
What is real and nominal interest rate?
A real interest rate is adjusted to remove the effects of inflation and gives the real rate of a bond or loan. A nominal interest rate refers to the interest rate before taking inflation into account.
How do you find the real interest rate?
A “real interest rate” is an interest rate that has been adjusted for inflation. To calculate a real interest rate, you subtract the inflation rate from the nominal interest rate. In mathematical terms we would phrase it this way: The real interest rate equals the nominal interest rate minus the inflation rate.
What is the difference between nominal and real interest rates?
The nominal interest rate is the rate you pay on a loan. The real interest rate is the nominal interest rate adjusted for inflation. a higher real interest rate reduces a borrowing firm's profit and hence its willingness to borrow.
Learn more about real interest rate :
brainly.com/question/16555286
#SPJ4
