Economics
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Fisher Equation

Relates nominal interest rates to the real rate plus expected inflation.

Formula

i≈r+πi \approx r + \pi

Variables

iNominal interest rate
rReal interest rate
\piExpected inflation

Example

Real 2% + inflation 3% ≈ 5% nominal

Did You Know?

When inflation outpaces nominal rates, real returns turn negative — savers quietly lose purchasing power.

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