Question 4 (True/False Worth 5 points) (02.04 LC) The difference between the nominal interest rate and the real interest rate is that the nominal interest rate is the percentage of interest earned after taking consideration inflation, whereas the real interest rate is the interest rate quoted by the bank. True OFalse

## Step 1<br />The problem statement is a statement about the difference between nominal interest rate and real interest rate. The nominal interest rate is the interest rate before taking inflation into account, while the real interest rate is the interest rate after adjusting for inflation.<br /><br />## Step 2<br />The statement in the problem says that the nominal interest rate is the percentage of interest earned after considering inflation, whereas the real interest rate is the interest rate quoted by the bank. This is incorrect.<br /><br />## Step 3<br />The correct definition of nominal interest rate is that it is the interest rate before taking inflation into account. It is the interest rate quoted by the bank.<br /><br />## Step 4<br />The correct definition of real interest rate is that it is the interest rate after adjusting for inflation. It represents the actual growth in purchasing power derived from an investment.