Examine the ideas that inflation reduces the value of money, including savings, that the real interest rate expresses the rate of return on savings, taking into account the effect of inflation and that the real interest rate is calculated as the nominal interest rate minus the rate of inflation.
Explain why savers expect a higher nominal interest rate when inflation is expected to be high.
Subject Area: Social Studies
Strand: Financial Literacy
Date Adopted or Revised: 04/15
Status: State Board Approved