Asked by Aaliya Smith on Apr 24, 2024
Investment and R&D decisions by firms are based on nominal interest rates, not real interest.
Nominal Interest Rates
The interest rate before taking inflation into account, representing the face value rate at which money can be borrowed.
R&D Decisions
Choices made by businesses or governments regarding the allocation of resources for research and development to innovate or improve products and services.
- Understand the relationship between nominal and real interest rates, inflation, and investment decisions.
Learning Objectives
- Understand the relationship between nominal and real interest rates, inflation, and investment decisions.