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Unformatted text preview: -The real value decreases. If interest rate is 10%, what happen? -The real value of saving remains the same. Nominal Interest Rate: Bankanın verdiği (ilan ettiği) faiz oranı. Real Interest Rate: The percentage increase in purchasing power that the borrower pays the lender. Real Interest Rate=Nominal Interest Rate-Inflation Rate Example: If no interest, a debtor borrows money from a creditor , who has an advantage? -Assume tha t debt is $100 and yearly inflati on is 10%. A year later , the real value of this money is $90 . Debtor has an advantage. Anticipated Inflation (expected), unanticipated inflation (unexpected)...
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- Spring '11