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Suppose the inflation rate is 3% when a 15-year mortgage loan is given at a fixed rate of 4.5%. Five years later the inflation rate rises to 4%. What impact does this change have on the nominal interest rate and the real interest rate on the mortgage loan

Respuesta :

As a result of the inflation, the nominal interest rate decreases and the real interest rate does not change.

What is nominal interest rate and real interest rate?

Interest rate is the cost of taking out a loan. Interest rate could be real or nominal. Nominal interest rate is real interest rate plus inflation rate. Real interest rate is interest rate that has been adjusted for inflation.

To learn more about interest, please check: https://brainly.com/question/26367706

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