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Interest Rates

Author: Kate Eskra

Source: Image of Money Market graph created by Kate Eskra, Images of Expansionary and Contractionary Monetary Policy created by Kate Eskra, Image of Government Impact on Money Market created by Kate Eskra

Video Transcript
Terms to Know
Deficits

Shortages that result from spending in excess of revenue.

Economic Growth

Measure of the change in real GDP over periods of time; percent change in value of the sum of goods and services produced in a country’s natural borders over a specified time interval.

Fiscal Policy

Typically policy set by a central government authority, whereby spending by the government is adjusted to stabilize economic activity.

Interest

The cost of money; nominal interest is the prevailing rate; real interest reflects the prevailing rate adjusted for inflation (real = nominal rate minus the inflation rate); return on investment where return varies based on the risk profile of the investment, time horizon, opportunity cost of a comparable risk-free investment, and inflation expectations.